Unlawful billing practices can subject a company to potentially significant legal liability, especially in a regulated business industry like telecommunications. A recent story involving AT&T provides a cautionary tale.
According to officials from the Federal Trade Commission, the telecommunications company recently agreed to a $105 million settlement for alleged unlawful billing practices under federal and/or state laws. That amount is in addition to $25 million in penalties, $5 million of which will be paid to the Federal Communications Commission. The rest will go to various states and the District of Columbia.
The scope of the proposed settlement agreement is equally massive, affecting all 50 American states and the District of Columbia. Also privy to the settlement are the FTC and the Federal Communications Commission.
AT&T came under scrutiny for the way it charged its mobile phone customers for third party services like ringtones or premium text messages. Another red flag to FTC officials may have been the kickback of at least 35% of those payments to a subsidiary of the company called AT&T Mobility.
In the industry, this unlawful practice is known as mobile cramming, where allegedly unauthorized charge entries in a phone bill may go unnoticed by customers. According to FCC Chairman Tom Wheeler, telecommunications companies charging customers for services they didn’t actually buy is a very real concern, affecting as may as 20 million individuals. AT&T’s billing practices in this regard may have begun in early 2009. To date, hundreds of millions of consumers’ dollars may be at stake.
The post is a good reminder that business litigation claims may come from a variety of plaintiffs -- including government regulators.
Source: Los Angeles Times, “AT&T to refund $80 million in settlement of mobile cramming case,” Jim Puzzanghera, Oct. 8, 2014