AT&T Mobility, one of the country's largest mobile phone companies, agreed to pay $80 million to the Federal Trade Commission to provide refunds to customers who were billed "hundreds of millions of dollars" in unauthorized charges for items including ringtones and text messages with love tips and horoscopes, the commission said.
In addition, AT&T will pay $20 million in penalties and fees to 50 states and the District of Columbia and a $5 million penalty to the Federal Communications Commission for the practices, known as mobile cramming. The settlement is the largest of seven such actions the F.T.C. has taken since April 2013.
"This case underscores the important fact that basic consumer protections — including that consumers should not be billed for charges they did not authorize — are fully applicable in the mobile environment," Edith Ramirez, the F.T.C. chairwoman, said in a statement.
AT&T said that it discontinued billing for those types of third-party charges in December 2013.
"While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for Premium Short Messaging Services," the company said in a statement. "Today, we reached a broad settlement to resolve claims that some of our wireless customers were billed for charges from third parties that the customers did not authorize. This settlement gives our customers who believe they were wrongfully billed for P.S.M.S. services the ability to get a refund."
The payments stem from charges, typically $9.99 per month, that were billed by other companies to the accounts of AT&T customers over several years, regulators said. AT&T kept at least 35 percent of the charges, the F.T.C. said, even as many as 40 percent of the billed customers complained about the practices.
In 2011 alone, the commission said, AT&T received more than 1.3 million calls to its customer service lines about the charges. In October of that year, AT&T altered its refund policy to lower the amount of charges that could be returned to customers to two months' worth from three months, a policy shift that the company characterized as intended to "help lower refunds," the F.T.C. charged.
The settlement is by far the largest yet that regulators have brought against mobile phone companies for cramming. Over the last year and a half, the F.T.C. has filed five cases against content providers — the companies that originated the charges. The largest of those involved the surrender of about $10 million in assets by the companies involved.
In July, the F.T.C. filed a similar case against T-Mobile, which is contesting the charges.
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