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AT&T Agrees to Refund Some Ringtone Charges

Company pledges to police Internet advertising more closely

March 3, 2008 

It's part of what Florida Attorney General Bill McCollum says a significant step toward protecting consumers throughout the nation from unauthorized charges on cell phone bills.

Besides agreeing to the refunds, AT&T says it will police representations made in internet advertising for cell phone content to ensure fair and full disclosure.

The cooperative agreement reached by the Attorney General’s CyberFraud Task Force with AT&T Mobility will establish a new model for the advertising and billing of cell phone content, McCollum said. Additionally, AT&T Mobility will pay $2.5 million to the Attorney General’s Office to fund the efforts of the task force as it continues to press for similar reform across the industry and will contribute an additional $500,000 toward consumer education on safe internet use.

“Consumers should never be billed for services they thought were free of charge,” said Attorney General Bill McCollum. “Today’s agreement establishes a precedent for wireless companies accepting responsibility for the way cell phone content is advertised on the internet and the manner in which charges are passed along to consumers. AT&T should be commended for being the first wireless company in the industry to offer this reform.”

Complaints received by the Attorney General’s CyberFraud Task Force led to an investigation which showed that thousands of Florida AT&T Mobility consumers had received charges on their cell phone bills for certain third party services that they did not authorize.

Often, these charges were for ringtones or other services which were advertised as “free,” but resulted in customers unwittingly being signed up for costly monthly subscriptions for third-party content, including horoscopes, wallpaper and other cell phone-related content. Examples of the bill charges often appear under the following indiscernible names:

• “Direct Bill Charges"”
• “3rd Party Downloadable Content”
• “Premium SMS Messages”
• “Premium Text Messages”
• “M-Qube”
• “M-blox”

Teens targeted

Investigators further determined that these third-party content offers often target teens who frequently respond to these advertisements because they think the services are “free,” and download them to their cell phones, not knowing their parents will later be charged.

These misleading practices are common in the industry and wireless companies often receive a percentage of the charges paid by consumers. Attorney General McCollum also announced today that he has directed the CyberFraud Task Force to initiate investigations into Verizon, Sprint/Nextel, Alltel and T-Mobile in an effort to ensure that all Floridians will be protected from being similarly charged without their knowledge.

“This settlement comes at a time when the digital consumer is faced with new deceptive internet scams on a daily basis,” said Brad Ashwell, legislative advocate for the Florida Public Interest Research Group.

“It’s encouraging to see a corporation of AT&T’s magnitude taking responsibility for unfair charges and it is encouraging that the funds from this settlement will ensure that the Attorney General’s CyberFraud Task force continues protecting consumers in the virtual marketplace,” he said.

Under the agreement, AT&T Mobility has agreed to adopt and enforce strict standards for internet advertising developed by the CyberFraud Task Force. The company, through its contracts with all content providers and advertisers, will now require those entities to clearly and conspicuously disclose the true cost of ringtones and other content in all online advertising to potential customers.

For example, a “free” ringtone offer that results in a monthly subscription at a cost of $9.99 per month to the customer must now clearly state, “Free ringtone with paid monthly subscription of $9.99/month,” and any such charges must be separately set out in the consumer’s AT&T Mobility monthly bill.

This will ensure that parents have timely notice of any unauthorized charges so they may cancel such subscriptions if they wish. Moreover, AT&T Mobility will continue to offer parents the option of blocking downloaded content from their children’s cell phones and will make this service available free of charge if third-party charges have already been billed without the parents’ knowledge.

The agreement with AT&T Mobility, formerly known as Cingular Wireless, allows customers to seek refunds even if they are no longer AT&T or Cingular customers. The company has also agreed to enhance its customer complaint resolution process and, upon request, will terminate a customer’s enrollment in any recurring membership program and will issue full credits and refunds without referring the customer to a third party for such resolution.

The task force intends to use the AT&T Mobility agreement as a model as it continues its investigation of the industry.

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