What Laws Were Broken by AT&T
In 2016, mobile service company AT&T was ordered to pay consumers $88 million in restitution for a tactic that is called “mobile cramming.” According to the FCC, “Cramming is the illegal practice of placing unauthorized charges on a consumer’s telephone bill. (FCC.gov, 2020). These tactics rely heavily on confusing, lengthy, and expensive phone bills to disguise and add in hidden recurring charges for third party items such as ringtones, horoscopes, and more.
Negative Consequences to Consumers
In situations with mobile cramming such as the case with AT&T, the consumer is paying for small charges monthly without ever being aware. These third party unauthorized companies rely on confusing phone bills to trick people into never knowing about these charges. This amount can add up greatly over time, and people are paying for services that they are not using, and may never even know about. This can also cause a great amount of distrust between a consumer and their phone company, such as AT&T. It is especially wrong because the charges are placed on their phone bill, any many just pay their bill without thought.
Consumer need to be more diligent as well and thoroughly go through bills, pay with a credit card for greater protection, and protect your cell phone number from crammer websites (Consumer Reports, 2012).
The penalties for cases such as this one mainly lead to a payment demanded from the FTC to consumers. In the case of AT&T, they were ordered to pay back $88 million to 2.7 million customers. Many phone companies have also agreed to automatically block third party vendors from automatically charging consumers as well in an effort to prevent cramming. Once the trust is lost however for a consumer, companies can struggle to come back from this.
Ethics in Mobile Marketing
When conducing mobile marketing campaigns, it is the job of the company to protect their customers, and their privacy. Companies are responsible to make customers aware of their privacy information, and how their personal information may be used. This needs to be shown right as someone is going on an app or website, this includes cookies. In regards to the case discussed with AT&T, they need to legally be responsible for unauthorized third party charges. Customers should also be shown any charges that are not directly from the phone company, and given the option to accept or deny transactions. Especially with elderly people who may not be as proficient with billing, it is very important to protect them, their information, and lastly their money.
References
FTC providing OVER $88 million in refunds to AT&T customers who were subjected to Mobile cramming. (2016, May 23). Retrieved from https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were
Mobile phone bill Cramming – Consumer Reports. (2012, August). Retrieved from https://www.consumerreports.org/cro/magazine/2012/08/beware-of-bogus-phone-bill-fees/index.htm
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