In an agreement with California Attorney General Edmund G. Brown Jr., AT&T Mobility has agreed not to charge customers for calls made after their cell phones are lost or stolen.

"This groundbreaking settlement makes AT&T the first cell phone company that has agreed to protect its customers from cell phone rip-offs and other unauthorized uses," Brown said. "It is now time for the rest of the cell phone industry to step forward and follow AT&T's example."

Brown had alleged that the company violated California law, including Public Utilities Code section 2890, which bars phone companies from charging customers for unauthorized services.

"No cell phone company should profit from calls made by thieves or unauthorized users," Brown said.

The Attorney General's Office began the investigation in 2006 after several consumers complained they were being charged thousands of dollars for calls made on cell phones that were stolen. In one case, calls originated from Mexico, a country the customer had never visited.

Although customers could fully document that the calls were unauthorized, AT&T refused to credit the accounts.

The agreement requires the company to credit a customer's bill or immediately investigate customer reports that the calls were made after the phone was lost or stolen. The company may only charge a customer if an investigation determines that the customer actually authorized the charges.

The judgment requires AT&T Mobility to inform each of their customers of their legal rights regarding lost or stolen phones. Under the agreement, AT&T must either credit the disputed charges or inform customers of their legal rights which include:

• The right to have the case investigated within 30 days

• The right to provide information showing a customer did not authorize= the calls

• The right not to pay disputed charges during the investigation=20

• The right to appeal the outcome of an investigation to the California= Public Utilities Commission.

AT&T must notify customers--in writing--of these new requirements and assist customers to obtain credit for amounts already paid on lost or stolen phones, back to year 2003.

AT&T will also pay the Attorney General's Office $500,000 for costs of the investigation and for the Unfair Competition Law Fund, administered by the California District Attorneys Association.

The California law for cell phones is similar to that for credit cards: customers have a right to dispute unauthorized charges and request an investigation. Customers should not be held responsible for charges until the investigation concludes, Brown said.