Most people are familiar with the practice of cramming — or suddenly waking up one day to find your wireless phone bill stocked with $10 per month services (usually horoscopes, “premium text message” or ringtones) you didn’t ask for and don’t want. While the government has occasionally come down hard on the small companies engaging in these scams because they’re easy legal wins, it has historically left the big carriers (and campaign contributors) alone, despite the fact that AT&T, Verizon, T-Mobile and Sprint all turn a blind eye to the practice in exchange for up to 40% of the proceeds. After a deep slumber, the government has finally started taking bigger companies to task, even if it’s a day late and more than a few dollars short.
Back in October, the FTC announced it had struck a $105 million settlement with AT&T, with an investigation finding that not only did AT&T turn a blind eye to crammers and the mountains of consumer complaints, it actively worked to make getting refunds more difficult. The telco also intentionally made bills more confusing so customers would have a harder time figuring out that they were being ripped off:
“The structure of AT&T’s consumer bills compounded the problem of the unauthorized charges, according to the complaint, by making it very difficult for customers to know that third-party charges were being placed on their bills. On both the first page of printed bills and the summary of bills viewed online, consumers saw only a total amount due and due date with no indication the amount included charges placed on their bill by a third party. The complaint alleges that within online and printed bills, the fees were listed as “AT&T Monthly Subscriptions,” leaving consumers to believe the charges were part of services provided by AT&T.”
AT&T’s not alone. Rumors indicate that Sprint is about to face similar penalties, and it seems like only a matter of time before Verizon joins the party. The FTC has also struck a settlement deal with T-Mobile that has the “uncarrier” paying $90 million in consumer refunds, $18 million in fines and penalties to the attorneys general of all 50 states, and another $5 million in fines to the FCC. Despite their recent reputation for consumer friendly behavior (the company said the FTC’s allegations were “unfounded and without merit” earlier this year), T-Mobile, like AT&T, made getting refunds nearly impossible and intentionally made the charges hard to see on consumer bills:
“According to the FTC’s July complaint, T-Mobile’s phone bills made it nearly impossible for consumers to find and understand third-party subscription charges. The FTC’s complaint against T-Mobile noted that in many instances information about the third-party charges crammed on to customers’ bills was buried deep in phone bills that totaled more than 50 pages in length.”
Of course if you figure out that carriers were getting 40% of $10 per month charged to tens of millions of customers for more than a decade, the fines don’t even come close to the amount of money these companies made by ripping off their subscribers. Better late than never?