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State attorney generals alleged that companies were packing charges onto AT&T cell phone bills, which disguised them as standard cell phone charges.

(Bloomberg Photo)

AT&T Mobility has agreed to a $105 million settlement with the attorney generals of Oregon and the other 49 states to address charges the company had charged its subscribers for services they hadn't ordered and didn't want.

Sample text messages consumers were charged for -- but didn't want.

It's a practice called "cramming," and it was endemic in the 1990s when third-party companies would "cram" unwanted services onto residents local phone bills. The bills were so complicated consumers often didn't notice the additional charges.

State attorneys general alleged that companies were doing the same thing, packing charges onto AT&T cell phone bills. A typical example, according to the Oregon attorney general's office, was a "premium text message subscription service" (PSMS) that offered horoscopes, trivial or sports scores for around $10 a month.

The Federal Trade Commission says AT&T's bills were "deceptive," lumping together charges to suggest they all stemmed from phone service – disguising the additional fees. The FTC said AT&T kept at least 35 percent of the charges.

The FTC established a site where consumers can apply for a refund under terms of Wednesday's settlement. Consumers can call 1-877-819-9692 to learn more.

The agreement calls on AT&T to notify consumers who were billed for such charges from January 1, 2009 to the present. Current subscribers will receive text and e-mail notifications within 60 days or, if they only get paper copies of their bill, an insert in their bill in a distinctive color.

The settlement administrator hired to process claims may contact former consumers via U.S. Mail, e-mail or published notices.

Consumers may also request old copies of their bills from the settlement administrator.

AT&T did not admit wrongdoing in the settlement, which calls for the company to provide $80 million in refunds, $20 million to the state attorney generals' offices, and $5 million to the FTC. The deal provides $750,000 to Oregon's Protection and Education Fund.

"While we had rigorous protections in place to guard consumers against unauthorized billing from these companies, last year we discontinued third-party billing for PSMS services," AT&T said in a written 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," the company wrote. "This settlement gives our customers who believe they were wrongfully billed for PSMS services the ability to get a refund."

All four major U.S. wireless carriers – AT&T, Sprint, T-Mobile and Verizon – agreed last fall to stop billing customers for commercial PSMS charges. AT&T is the first to settle the accusations.

Update, 11:40: This article has been updated with comment from AT&T.

Update, 3:15: This article has been updated with additional details about how the refund process will work.

-- Mike Rogoway; twitter: @rogoway; 503-294-7699