The Federal Trade Commission has announced that approximately 2.7 million existing and previous customers of AT&T Inc. (NYSE:T) will get a refund before the end of the year. This follows a settlement reached in October 2014. AT&T had been found guilty of a scheme referred to as ‘cramming. A total of $88 million will be refunded.
Calling on the Federal Trade Commission
In the ‘cramming’ scheme, customers of AT&T would find charges totaling up to slightly under $10 in their monthly bills. This would be for services they had not consented to such as premium texts containing horoscopes, fun facts and love tips. Other services billed for non-consensually included ringtones, and phone wallpapers. Complaints from consumers saw the Federal Trade Commission intervene.
“AT&T received a high volume of complaints related to mobile cramming prior to the FTC and other federal and state agencies stepping in on consumers’ behalf,” said Edith Ramirez, the chairperson of the Federal Trade Commission.
In 2014, the Federal Trade Commission and AT&T reached a settlement of $105 million. While $88 million is the amount set aside for customer refunds, there is an amount totaling $17 million meant to cater for federal and state fines. Former customers of the wireless giant will get the refunds via checks, while existing customers will have the refund credited to their phone bills.
Birds of a feather
Cramming schemes are not restricted to AT&T. Other major carriers in the United States such as T-Mobile US Inc (NASDAQ:TMUS), Sprint Corp (NYSE:S) and Verizon Communications Inc. (NYSE:VZ) have also been accused of the practice and have had to reach huge settlements with the Federal Trade Commission.
To manage the refund program, a refund administrator has already been appointed. The administrator, Epiq Systems, will start the application of credits to phone bills of the affected and existing AT&T customers with immediate effect. The mailing of checks, which former AT&T customers must cash before two months are over, will also begin immediately.
In Thursday’s trading, AT&T fell 0.05% to close the day at $40.41 a share.