Feds slam AT&T for improper billing

Last Updated Oct 9, 2014 8:26 AM EDT

The federal government is waging war on "mobile cramming."

The Federal Trade Commission, along with all 50 U.S. states and the District of Columbia, have reached a $105 million settlement with AT&T (T) to halt the practice, in which third-party companies charge phone users for ringtones, horoscopes, sports scores and other services without their approval. The government this summer also filed a filed a complaint against T-Mobile over the same issue.

Telecommunications carriers like AT&T and T-Mobile collect a portion of the fees charged to consumers, with cramming estimated to cost consumers hundreds of millions of dollars a year.

"It's good to see the government being more aggressive in going after the big carriers for their role in fleecing customers." Delara Derakhshani, policy counsel for Consumers Union, the advocacy arm of Consumer Reports, told CBS MoneyWatch.

The FTC said that AT&T billed customers for hundreds of millions of dollars charged by other companies, usually in amounts of $9.99 month. The wireless giant kept at least 35 percent of those customer charges, according to the agency. (Consumers who believe they were charged for services they didn't want can visit www.ftc.gov/att to ask for a refund; they can also call the settlement administrator at 1-877-819-9692 for more information.)

Despite the government crackdown, the problem may not go away anytime soon, she added. "We're especially glad that the government recognizes that this is both a wireless problem and a wireline problem. Looking ahead, one of the persistent challenges is keeping up with the advances in technology."

Additional mobile-cramming settlements can be expected. Large telecoms will likely be forced to tighten their billing practices to stem complaints from unhappy customers and to avoid government action.

Consumers billed for phone services they didn't order should report them to their carrier to get them reversed. They can also file a complaint with the FTC. Follow these tips to avoid cramming:

  • Ask your carrier to block third-party charges.
  • Be careful of where you type your cell phone number. Entering it on websites that are not secure could be the ticket to a shady outfit signing you up for a costly service.
  • Be leery of text messages appearing on your mobile device with services you did not request. It's a likely sign that you've been signed up for a premium service you're getting billed for (or will be billed for soon).
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    Mitch Lipka is an award-winning consumer columnist. He was in charge of consumer news for AOL's personal finance site and was a senior editor at Consumer Reports. He was also a reporter for The Philadelphia Inquirer and the South Florida Sun-Sentinel, among other publications.