AT&T Settles Cell Phone Scam Suit

Nation's Largest Carrier To Repay Fla. Customers For Unauthorized Ringtones And Text Charges

(CBS/AP)  AT&T Mobility, the nation's largest cell phone carrier, has agreed to pay thousands of Florida consumers who were billed for third-party services such as ringtones and text messaging that were advertised as free.

The settlement announced Friday between Florida Attorney General Bill McCollum and AT&T Mobility could result in refunds of more than $10 million in all, depending on how many consumers seek compensation.

McCollum said the main culprits are third-party companies that advertise ringtones and other services on the Internet, often promising that the service will be free. When customers - often teenagers - sign up, they or their parents are then surprised to find charges on their wireless bill.

"They will download this thinking it's free because the advertising on the Internet says it's free," McCollum said. And when the charge shows up on the bill, it's not always clear what it is, either, he added.

"This advertising is wrong, it's deceptive ... and it's all over the Internet," he said.

Last week, CBS News correspondent Sharyl Attkisson reported that replying to a text message or even browsing a Web site can unleash a flury of phone-bill charges for unordered and unwanted services.

It's called "cramming" - charges for services you didn't order and don't want that can be next to impossible to stop. Last year, the FCC ordered millions of dollars returned to angry cell phone customers who said they were scammed, Attkisson reported.

AT&T Mobility has agreed in the settlement to police such agreements with third-party providers and make it clear what the charges are for.

"It's going to say 'ringtones,' and it's going to give them an opportunity to cancel," McCollum said.

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Couric & Co. Blog: Ring, Ring ... Gotcha!

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McCollum said his office is in the process of investigating other cell phone companies to determine the extent to which they're allowing fraudulent third-party billing, and plans to push for refund agreements with all the major providers.

Atlanta-based AT&T Mobility also noted in a statement that the problem is an industrywide one, and also emphasized that it didn't sell the ringtones or other phone content, but simply billed its customers for third-party services that they had purchased.

AT&T said it has put safeguards in place to help customers understand what they'll be billed for.

Under its practices, "the customer must take an affirmative action - sending a text message - before a third-party provider can sell the customer ringtones, graphics, games, or other content," AT&T said. "Third-party providers must also make clear the pricing for these services and how to unsubscribe.

"Said another way, our goal is no surprises," the company said.

While praising AT&T for agreeing to provide refunds and better police its third-party agreements, and noting that the fraudulent advertising was done by other companies, McCollum said the wireless giant wasn't entirely blameless.

"They did have misleading billing," McCollum said. He also noted that AT&T got about 40 percent of the charges for third-party services billed to their customers.

AT&T Mobility, formerly Cingular Wireless, will also pay the state $2.5 million and contribute $500,000 toward consumer education on safe Internet use under the agreement.

McCollum said it was easier for the state to go after AT&T and pressure it to better police its contracts with third parties than to go after the actual companies selling the ringtones and other content - because there are so many of them.

"As soon as you close one of them down, another one of them is going to pop up," McCollum said.

McCollum's office had received a few hundred complaints about the billing practice, but in investigating the issue found that AT&T had received thousands of similar complaints.

Brad Ashwell, a spokesman for the consumer organization Florida Public Interest Research Group, praised McCollum for taking on the telecom giant and said the complicated nature of sales of services over the Internet and how they are billed needs to be carefully policed.

"The digital marketplace is sort of a Wild West right now," Ashwell said.

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If you think you've been a victim of a cell phone scam:

According to the FCC, Consumers may submit a general complaint to the FCC at: [e-mail]. If someone has questions or needs assistance filing a complaint, Consumer and Mediation Specialists are available Monday through Friday, 8 a.m. to 5:30 p.m. ET. Call Toll Free: 1-888-CALL-FCC (1-888-225-5322) voice, 1-888-TELL- FCC (1-888-835-5322) TTY.

Or check out the FCC's cell phone scam information page here.

[genghis007]

Consumers, anyone who has AT&T, immediately cancel your subscription when your contract is up. DO NOT allow these corporations to continuously take advantage of Americans. Maybe, when no one subscribes and they lose their a$$, companies will develop ethics.

[drivelphobe]

Next, they should investigate the ETF scam, (early termination fees). AT&T has masterminded the process of tricking customers into unknowingly, accepting over the phone, what they are lead to perceive to be automatic upgrades. The conversation re-activates the original contract and locks you in for another two years. (You have to read the fine print buried in your original receipt).

These conversations are NOT recorded, surprise, so it''s your word against some commissioned bozo hired to screw you. To fight it is a morass of processes designed to make you give up.

The AT&T company is as slimy as they come. If you have any other option, I would recommend using it.

[garym1950]

I got a call from AT&T telling me if I signed up a 2 year contract, I would recieved 2 Razr phones free. I was billed $200.00 for the phones and they were to mail me 2 each $100.00 VISA cards to help pay for the phones, Well its 2 years later and I have never seen the Rebates and numerious calls to the IMPOSSIBLE phone system, No one knows anything about this special offer. so I ended up paying for the so called free phones

[excoachken]

AT + T does the same thing with text messaging. Being an old goat, I never asked for the option when they took over my Cingular account and they would routinely send me advertisements as text messages and charge 15 cents on my bill for each of the annoying ads that I received. It''s a great business when you can charge the person receiving you unsolicited ad and also make them pay a duty for the privilege!

[photogeezer]

THIS is the market, the free-enterprise system the right wants us to believe we should put our trust in. While I accept and embrace the benefits of free enterprise (state-of-the-art medicines, benefits of competition, etc), there HAS to be government control.

Under Republican administrations, corporations can do no wrong. By appointing crony judges to the bench, they hope to stifle lawsuits and legal remediation.

[jwind11]

It''''''''s bad it''''''''s getting worse by the minute. My standard of living has gone down constantly for decades and it isn''''''''t getting any better.

Posted by skyk at 12:59 PM : Feb 29, 2008

Most peoples have gone up.....must be personal choices made...not the presidents fault

Posted by jwind11 at 02:37 PM : Feb 29, 2008

[it_oldtimer]

MOST people''s incomes have NOT gone up, and it most definitely IS the President''s and the Republicans fault.

[rudy654-2009]

Most peoples have gone up.....must be personal choices made...not the presidents fault

Posted by jwind11 at 02:37 PM : Feb 29, 2008

You must listen to Rush Limbaugh.

[it_oldtimer]

When adjusted for inflation most people earn less now than they did 40 years ago.

The Republicans always favor soul-less corporations over people, and they always staff Federal agencies that are charged with protecting American citizens from predatory practices with INDUSTRY LOBBYISTS who serve only their corporate masters.

It''s a classic case of the foxes guarding the hen house - and we citizens are the hens they''ve been feasting on for so long.

[watcher269-2009]

Another Republican Scam - Fu*ckin the American people for their private use!

[jwind11]

MOST people''''s incomes have NOT gone up, and it most definitely IS the President''''s and the Republicans fault.

Posted by IT_Oldtimer at 03:32 PM : Feb 29, 2008

Go get a better job then.

[rudy654-2009]

Posted by jwind11 at 05:43 PM

Translation: "let them eat cake."

[inventagod]

A T & T

W = Worst Ever

same-o

[reel-crazy]

The pathetic part of this story is that AT&T is only going to refund money to those that seek compensation. They know precisely how much and to whom the money was deceptivly collected from and should be held accountable, as well as responsible for seeing to it that prompt refund checks are issued to all.

They will still come out like the bandits they are because most people won''t even take the time to pursue their refunds.

It''s just more corporate greed....

[pensacola88]

ATT = Avoid Trusting Them

This lawsuit settlement will be one of many. It is clear that when this company reassembled itself, it had not changed any of it''s self-defeating tactics commonly seen in bad business.

The sooner AT&T is removed from the industry, the better. It will happen - one lawsuit at a time.

[dylanxxv]

I wonder how AT&T handles bills like this in Arizona?

[dan_shields-2009]

ATT = Avoid Trusting Them --L0L

AT&T has never been trustworthy, I''ve always had Verizon and thats the way its going to stay no problems with them ever...i feel bad for you AT&T guinea pigs..i mean customers

[Frisky1989]

I''m sorry that all these people are having problems with AT&T. I guess I''m one of the lucky few because I''ve had service with them for over 4 years & never had any problems with them

[missingamerica]

The rest of the states better take their shots soon - else the big carriers will try to escape their responsibility for this to by having it rolled into the Administration''s next "backwards immunity" package.