AT&T is facing a class-action complaint over its practice of charging a $1.99-per-month "Administrative Fee" that isn't disclosed in its advertised rates.

As the complaint notes, "AT&T prominently advertises particular flat monthly rates for its post-paid wireless service plans." But after customers sign up, the telco "covertly increases the actual price" by tacking on the "bogus so-called 'Administrative Fee,'" according to the lawsuit filed Thursday in US District Court for the Northern District of California.

AT&T "hides" the fee in an easy-to-miss spot in customer bills, the complaint says, and it "misleadingly suggests that the Administrative Fee is akin to a tax or another standard government pass-through fee, when in fact it is simply a way for AT&T to advertise and promise lower rates than it actually charges."

AT&T also provides an explanation "deep within" its website, but this is not an adequate disclosure, and the website description "serves to further AT&T’s deception and scheme by suggesting that the Administrative Fee is tied to certain costs associated with AT&T providing wireless telephone services (interconnect charges and cell site rental charges)," the complaint said.

If AT&T's description of the fee is accurate, "it would merely reinforce that this undisclosed fee should be included in the advertised monthly price for the service because those are basic costs of providing wireless service itself, and thus a reasonable consumer would expect those costs to be included in the advertised price for the service," the complaint said.

AT&T's website acknowledges that the fee is not a tax or required by the government. But the complaint says that AT&T customer bills list the fee in the "Surcharges & Fees" section, which is otherwise used to list "government costs AT&T must pay (e.g. taxes)." This suggests to customers "that the Administrative Fee is akin to a tax or is another government-related pass-through charge, which it is not."

AT&T raised fee despite its costs going down

AT&T introduced the fee in 2013 at the rate of $0.61 per month and has raised it three times. But if the fee was determined by AT&T's actual costs, it should have decreased, the complaint says:

Moreover, on information and belief, the fee is not, in fact, tied to the costs that AT&T’s buried description suggests. This is corroborated by the fact that AT&T has repeatedly increased the amount of the monthly Administrative Fee since the fee was first imposed, while during that same time period the stated costs that the Administrative Fee is purportedly paying for (i.e., interconnect charges and cell site rental charges) have actually decreased according to AT&T’s financial statements. In all events, AT&T should clearly disclose the Administrative Fee and should clearly and accurately state the true monthly prices for its post-paid wireless service plans in its price representations and advertising. AT&T has failed to do so, and continues to fail to do so.

AT&T's website says the Administrative Fee "is subject to change from time to time as AT&T's costs change."

By increasing the hidden fee, AT&T is able to raise its actual prices without publicly announcing the new, higher rates, the complaint says. AT&T has improperly collected "hundreds of millions of dollars" from California customers by charging this fee over the past six years, the complaint alleges.

The suit accuses AT&T of violating California's Consumer Legal Remedies Act, and it says that AT&T can't sidestep the lawsuit because the arbitration provision in AT&T's standard customer agreement violates California law.

Seeking class-action status

The lawsuit was filed by AT&T customers Ian Vianu and Irina Bukchin, and it seeks class-action status for all current and former AT&T customers in California who were charged the Administrative Fee. The lawsuit also asks for a permanent injunction to force AT&T to stop charging the fee, as well as an order forcing AT&T to pay damages, restitution, and legal costs to the class.

People who have been charged the fee can contact Hattis Law, the firm representing the plaintiffs, using this online form.

When contacted by Ars, AT&T said only that "The lawsuit is wrong. This is a standard fee, and we disclose it to our customers."

Hattis Law also spearheaded a pending lawsuit against Comcast over its practice of charging "Broadcast TV and Regional Sports Network" fees that aren't included in its advertised cable TV rates. AT&T charges similar fees on its TV service.