Scam of the day – August 19, 2016 – AT&T penalized 7.75 million dollars over cramming charges

It was just two years ago that AT &T paid a 105 million dollar settlement related to cramming on cell phone bills.  Cramming is the name for adding unauthorized third party charges to a consumer’s telephone bill without the knowledge or approval of the consumer.  This has long been a problem with landline phones and recently has become a major problem with cellular service.  There are many ways that these unauthorized charges make their way to a victim’s phone.   Sometimes, consumers unknowingly sign up for premium texting services that may be for things such as flirting tips, horoscopes or celebrity gossip when entering a contest or lottery.  Whatever the source of the charges, they are fraudulent and typically cost about $9.99 per month and continue to appear for months without end.  Recently, while conducting a drug and money laundering investigation, the Drug Enforcement Agency (DEA) discovered two companies, Discount Directory, Inc. and Enhanced Telecommunications Services that were sham companies established for the sole purpose of cramming nine dollar monthly directory service charges on to AT&T landline bills.  While AT&T was not aware these charges were fraudulent when they agreed to add these charges to consumers’ bills, neither did they ask for any proof that their customers had actually signed up for these services.  Meanwhile, AT&T got a share of every monthly crammed payment.  According to the FTC, AT&T “ignored a number of red flags that the charges were unauthorized, including thousands of charges submitted by the Companies for nonexistent, disconnected, or otherwise ‘unbillable’ accounts.”

Pursuant to the new settlement, AT&T will refund all the fees it collected on behalf of the two companies as well as pay a $950,000 fine.  They have also agreed not to bill for most third-party services on landlines. AT&T has indicated that they will be sending refund checks to their defrauded customers within the next 90 days.

TIPS

Even if you are not an AT&T customer  this case is another reminder that you should carefully review your phone bill each month to make sure that there are no unauthorized charges.  Telephone bills can be long and complicated to read, but is important to make sure that you understand every charge that appears on your bill because sometimes crammers make the charges appear to be legitimate.  If you find a charge for a service you did not order, contact your phone service provider to have the charges removed.