Attorney General Abbot Secures Settlement with AT&T

Consumers Receive over $800,000 in Refunds

Agreement forged in collaboration with Public Utility Commission

AUSTIN - Texas Attorney General Greg Abbott today filed an agreement in court that acknowledges AT&T’s role in overcharging thousands of its customers a total of more than $800,000 for long-distance phone service. The “monthly recurring fees” began appearing on residential bills beginning in January 2004. The Public Utility Commission also approved this agreement today.

According to the agreement, AT&T overcharged 75,000 of its customers a monthly recurring fee of $3.95 per household bill. The company has already refunded or credited the money back to consumers.

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AT&T settlement (PDF)

“The company’s correspondence with its customers about this ‘charge’ was so misleading – and, as it turns out, erroneous – that most consumers were confused at best and deceived into paying it at worst,” said Attorney General Abbott. “I am pleased the company saw the error of its ways and made total refunds to all affected consumers.”

PUC Commissioner Julie Parsley agreed, saying, “Phone companies that continue to bill customers for unauthorized charges must stop these illegal cramming operations immediately, or they will pay a severe price. At the same time, the PUC urges all phone customers to review all their telecom bills – local, long distance and Internet – and eliminate unnecessary and duplicate services to save money.”

The Attorney General and the PUC alleged the company’s intent was to apply the monthly recurring fee to consumers enrolled in its interstate basic rate plan for current long distance service. However, the company also sent notices of this fee to many other residential consumers who were not required to pay the fee. These included:

consumers who were already enrolled in one of AT&T’s other domestic long-distance calling plans;
customers of the company’s “Lifeline” plan, which assists certain residents with costs of basic service; and
any AT&T local service customer

Moreover, consumers who reported the apparent billing errors to the company were either told they must pay the charge or were misled about the charges and their rights to appeal the billings. Further, consumers were often subjected to sales pitches about new products and services available to AT&T’s customers when they called to make reports.

Under the terms of the agreement, the company may not implement such a monthly fee without clearly indicating to its customers the nature of the charge and how it fits into their calling plans.

The Attorney General’s Office and the PUC will receive $195,000 each from AT&T to cover attorneys’ fees and civil penalties, respectively.

updated: 05/14/2008