Lessons from the AT&T Mobile Cramming Case

By: Gianna Blawas – August 8, 2025

What law was violated in the AT&T case?
In the FTC’s AT&T “mobile cramming” case, the company was found to have billed customers for third-party premium text services—such as ringtones, wallpaper subscriptions, and horoscope tips—without their informed consent. This conduct violated Section 5 of the FTC Act (15 U.S.C. §45), which prohibits unfair or deceptive acts or practices. The case resulted in more than $88 million in refunds to over 2.7 million current and former AT&T customers, as part of a larger $105 million settlement with the FTC, the Federal Communications Commission (FCC), and state attorneys general (Federal Trade Commission, 2016).

Negative consequences to consumers
Mobile cramming caused direct financial harm by adding unauthorized charges—often $9.99 per month—to customers’ bills. It also created indirect harm, including the time and frustration required to dispute charges, potential service disruptions when customers refused to pay, and loss of trust in mobile billing systems. In many cases, customers were unaware of the charges for months, leading to cumulative costs.

Other real-world cases and penalties
AT&T’s settlement was part of a broader crackdown on mobile cramming. T-Mobile agreed to pay at least $90 million in refunds for similar unauthorized charges (FTC, 2014). Verizon and Sprint collectively paid $158 million to resolve comparable allegations (FTC, 2015). Outside of cramming, companies engaging in unauthorized texting or calling can face lawsuits under the Telephone Consumer Protection Act (TCPA), which allows damages of $500 per violation—or up to $1,500 per willful violation—creating massive potential liabilities for large-scale campaigns without proper consent.

Possible penalties for violations
Penalties for mobile marketing violations vary depending on the law breached but can include:

• Full consumer refunds for affected customers.
• Civil fines and statutory damages (such as under the TCPA).
• Injunctive relief requiring companies to change billing or marketing practices.
• Ongoing compliance monitoring by regulators.

In AT&T’s case, the settlement required not only monetary refunds but also reforms to ensure customers receive clear, conspicuous disclosures before being billed for third-party services, and that charges are only applied with express informed consent.

Ethical actions for mobile marketing compliance
To remain ethical and compliant, mobile marketers should:

• Obtain express, informed consent before billing or sending promotional messages.
• Provide clear and conspicuous disclosures about pricing, terms, and message frequency.
• Make opt-outs simple and immediate (e.g., “Text STOP to cancel”) and honor them promptly.
• Vet and monitor third-party partners to ensure they comply with legal standards.
• Avoid deceptive or misleading practices and substantiate all marketing claims.

Conclusion
The AT&T case serves as a cautionary tale for any business engaged in mobile marketing or billing. Violating consumer trust through unauthorized charges not only leads to substantial legal penalties but also causes long-term reputational damage. By prioritizing transparency, consent, and responsible third-party management, companies can avoid the pitfalls of mobile cramming and maintain the trust and loyalty of their customers.

References:

FTC providing over $88 million in refunds to AT&T customers who were subjected to mobile cramming. (2021, September 18). Federal Trade Commission. https://www.ftc.gov/news-events/news/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were-subjected-mobile-cramming