AT&T Mobility agreed Friday to give refunds to its Florida cell phone customers who were billed for ring tones, horoscopes or other services they were led to believe were free.
Florida Attorney General Bill McCollum announced the settlement, which includes a $2.5-million payment to his office and an additional $500,000 to pay for consumer education on safe Internet use.
AT&T (formerly known as Cingular) also agreed to improved disclosure requirements nationwide for third-party vendors whose bills are included in wireless phone bills. That means, for example, that companies will have to clearly explain that downloading a "free" ringtone means subscribing to a service that costs $9.99 a month.
"Consumers should never be billed for services they thought were free of charge," McCollum said. "(Friday's) agreement establishes a precedent for wireless companies accepting responsibility for the charges placed on consumers' bills."
McCollum said his office's CyberFraud Task Force also will be looking at vendor billing practices at Verizon, Sprint/Nextel, Alltel and T-Mobile.
Refunds for AT&T's Florida customers could reach $10-million to $45-million, according to McCollum's office. However, AT&T spokesman Marty Richter said the company doesn't expect many customers to apply.
"The vast majority who had unauthorized charges probably already have received credits or refunds through existing policies," he said. Richter would not say how many Florida customers the company has.
Although AT&T was not the source of the problems, it provided the payment mechanism, with the vendors' charges tacked on to cell phone bills. McCollum said vendors used Internet advertising to target teenagers who didn't realize that the ringtones, wallpaper and other services they downloaded weren't really free. Now information about subscription fees must be "clearly and conspicuously" disclosed. Richter said AT&T also offers free "parental controls" to block the purchase of those services.
In the next 90 days AT&T will notify current customers about the settlement by e-mail or mail and will send e-mails to former customers for whom it has e-mail addresses. A toll-free telephone number and Web site will be set up with information on how to make a claim.
"We are pleased to lead the industry with this cooperative agreement to make sure our customers are only billed for services they agree to," AT&T spokesman Richter said.
Helen Huntley can be reached at [email protected] or