The Federal Trade Commission (“FTC”) has announced an historic consumer refund initiative to provide relief to millions of AT&T Mobility, LLC (“AT&T”) customers that were the subject of mobile cramming. The settlement arises out of a mobile cramming-related lawsuit against not only AT&T, but also Tatto, Inc. (“Tatto”) and Acquinity Interactive, LLC (“Acquinity”), the two main companies behind the underlying marketing campaigns that resulted in the alleged mobile cramming.

What is the scope of the mobile cramming settlement?

The FTC alleged that AT&T had placed unauthorized third-party charges on the mobile telephone bills of millions of current and former subscribers. Typically, the subject charges were in the amount of $9.99 per month for services, such as ring tones and text message subscriptions, offered by or on behalf of Tatto and Acquinity, as well as other companies. Through the settlement, the FTC envisions that approximately 2.7 million AT&T customers will receive refunds averaging $31 per customer within the next three months. In addition, the settlement agreement mandates that AT&T make significant changes to its third-party billing practices, including providing more prominent disclosures to customers and implementing new processes for obtaining customer consent to incur third-party charges.

Marketing Attorneys’ Role in Protecting Against Mobile Cramming-Related Liability

Please note that affiliating with the right marketing partners can make all the difference for a venture in this industry. Unfortunately, many mobile marketers suffered significant financial consequences as a result of the FTC’s investigation into the mobile cramming allegations that resulted in this settlement. This case represents another clear example of the importance of engaging knowledgeable marketing counsel when pursuing mobile marketing ventures. Not only will experienced marketing counsel provide a level of expertise regarding applicable marketing law, but counsel will also offer an understanding of the relevant players in the space. Having a clearer idea of the most beneficial entities with whom to partner, as well as being able to properly draft a contract to protect against the downside risks of a partnership gone awry, are just some of the benefits of working closely with marketing counsel.