Did you download that ringtone? Settlement targets 'cramming'
When Jean Cotton of Vernon Hills looked closely at her and her husband's Cingular Wireless bill in March 2006, she wondered about a $21 charge for downloads.
The itemized bill cited "Direct Bill Communications downloads" and referred to "MQube." Jean and her husband Gabriel never downloaded games or other items onto their phones and were perplexed. They called Cingular (now AT&T), which claimed it couldn't do anything about it but still offered to remove the charge.
Yet the charges returned each month for several months.
"It was very frustrating," said Cotton. "We thought it was fixed and it kept returning."
They paid about $30 and eventually the charges stopped.
The practice of charging cell phone users for products or services they didn't authorize is referring to in the industry as "cramming."
Like the Cottons, many traced the cramming to California-based Mobile Messenger Americas Inc., which led to a class-action lawsuit filed last December in U.S. District Court in Miami, where a key victim lives.
The Chicago lawyers who initiated the case said Thursday that a preliminary settlement was approved for $12 million, although the company denied any wrongdoing. The lawyers will be paid $1.2 million, according to the settlement.
Consumers could start applying for compensation. Details are available at www.CellPhoneDownloads.Class-Action-Admin.com.
Court approval of the final settlement is expected in December and checks are expected to be mailed to consumers in about 60 days, according to the settlement.
This is the first time that such a lawsuit reached a settlement regarding unauthorized downloads onto mobile phones, said Chicago attorney Myles McGuire of Kamber Edelson LLC law firm, which spearheaded the case.
"This is a very promising industry that's growing fast and will become very large," said McGuire. "All of our cell phones are morphing into credit cards where we purchase products and services through third parties."
Mobile Messenger CEO Steve Taylor said in an e-mailed statement that his company wanted to settle the case.
"It was our decision to provide leadership to the industry and settle the outstanding class action litigation on behalf of ourselves and our partners," Taylor said. "As an industry we are continuing to evolve and consumer protection is our highest priority. We continue to strive for the best consumer experience whilst providing innovative products and mobile content."
The Mobile Messenger case alleged that no adequate safeguards were in place to ensure that customers were billed only for services they agreed to purchase. Many cell phone users received a text message about downloading content, including ringtones, games, graphics and other items, The company then acted as an intermediary between content providers, marketers and cell phone providers, the documents said.
The average charge was about $10 a month, said McGuire.
"In a lot of instances, people didn't even realize it and just paid it," McGuire said.
Many wireless phone bills are confusing with section after section of charges, taxes and other fees, said Cotton.
"Most people don't really look at their bills and probably never knew they were paying for something they didn't get," she said.