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AT&T settles suit on cellphone fees

Customers who were charged for spurious third-party content such as ring tones will be eligible for refunds.

June 03, 2008|Peter Svensson | The Associated Press

NEW YORK — AT&T Inc. customers who have seen mysterious charges for ring tones and other content show up on their cellphone bills will be eligible for refunds as part of the settlement of a group of class-action lawsuits, a lawyer for the class said Monday.

Customers will be able to claim refunds for spurious charges that appeared on as many as three of their monthly bills between Jan. 1, 2004, and May 30, 2008, said Jay Edelson, lead counsel for the plaintiffs.

It is the first nationwide settlement over the business of third-party content, Edelson said. AT&T spokesman Marty Richter said he knew of no other similar settlement.

Edelson's firm has filed similar suits against Verizon Wireless, Sprint Nextel Corp. and T-Mobile USA.

Vendors of ring tones and daily text-message services with horoscopes and jokes solicit customers to sign up by entering their phone numbers on websites or by sending text messages. The charges, which can be hidden or poorly explained, show up later on cellphone bills, often as recurring charges.

The cellphone carrier keeps some of the fee and passes the rest to the content provider.

Sixteen class-action suits that are part of the settlement alleged that AT&T should have been more careful in vetting the services. AT&T did not admit wrongdoing.

The settlement shows the company "really does want to fix this problem and not benefit from any of the unscrupulous third-party instances out there," Edelson said.

The company now requires customers who sign up for third-party services with recurring fees to confirm by replying to a text message. It also requires the content providers to send monthly reminders with instructions on how to unsubscribe from such services.

"AT&T has taken aggressive action to put industry-leading safeguards in place to protect our customers from unauthorized changes from third parties. We believe this settlement is consistent with that approach," Richter said.

Richter had no estimate for how much the settlement would cost AT&T. Given that the company already lets customers contest spurious charges, the number who will get refunds through the settlement will be small, he said. The company will pay the plaintiffs' lawyers $4.3 million.

Notifications will soon go out to 70 million AT&T Mobility customers.

In some cases, Edelson said, charges for ring tones have shown up on bills for wireless laptop data cards, which have phone numbers but no way to use ring tones. That points to "cramming," or providers signing up customers without their knowledge.

A final approval hearing for the settlement is scheduled Dec. 8. Claims under the settlement must be filed within 90 days of the final approval of the settlement.

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