AT&T Bills, Upsell Draw Lawsuits and Suspicions
Attorneys general in Florida and Minnesota have filed lawsuits involving the complaints, while consumer authorities in Wisconsin and New York have begun investigations and are in talks with AT&T.
Consumers have accused AT&T of duping them into calling the company so it could pitch them on phone services while getting around national and state no-call lists. In a statement, AT&T acknowledged that up to 1.1 million consumers received bills in error but denied the errors were part of a deceptive marketing campaign.
"It is important to note that these are billing errors only and that AT&T has not engaged in slamming or unauthorized switch activity," AT&T said. "There have also been allegations that we purposely misbilled customers in order to induce them to call AT&T. This is flat-out wrong."
AT&T said that 200,000 to 300,000 non-customers received bills in error, as did up to 800,000 customers. The erroneous bills resulted from a "combination of systems issues," the company said.
The bills informed consumers that AT&T would begin charging them an extra $3.95 a month, plus tax. In January, AT&T implemented the monthly fee for its basic state-to-state, direct-dialed long-distance plan, the company said.
The fee does not apply to customers who use AT&T local service or an upgraded long-distance plan. Many consumers thought AT&T's message was that if they didn't upgrade their service, they would have to pay an additional fee, said Jim Rabbitt, director of consumer protection at the Wisconsin Department of Agriculture, Trade and Consumer Protection.
According to the Florida and Minnesota attorneys general, consumers who called AT&T to complain were told by AT&T agents that they would have to sign up for a calling plan to get refunds. Both states accuse AT&T of using hard-sell tactics on the consumers and keeping them on hold for long periods.
Consumers had to navigate lengthy phone trees and switch between agents, a spokeswoman for the Florida attorney general's office said. Some consumers were on the line for an hour.
Florida attorney general Charlie Crist sued AT&T on April 30, and Minnesota attorney general Mike Hatch filed suit May 6. Both lawsuits seek compensation for consumers who paid AT&T in error and civil penalties against AT&T, in Florida's case up to $10,000 per improper bill.
New York's Consumer Protection Board first warned of the AT&T bills in February, referring to them as a "back-door sales pitch," and later referred the case to the state Public Service Commission. On May 4, the commission said that it was still receiving complaints from AT&T consumers about the bills but that AT&T had agreed to suspend the charges and investigate its billing records.
Teleservices experts acknowledge that there is a proper time and place for upsells. Upsells and cross-sells should be offered only after a customer's service issue has been resolved to his or her satisfaction, said Deborah Pearlman of DKP & Associates, Skokie, IL.
"The customer is not open to hearing the offer until after you've resolved their issue first," she said. "They're just not going to be listening."
The federal Telemarketing Sales Rule states that only outbound calls to people registered to the national no-call list are illegal, though it notes that an upsell is "very much akin to an outbound telephone call from the consumer's perspective."
AT&T said it is moving to correct problems caused by the incorrect bills. Consumers will receive a letter of apology and a refund in 60 to 90 days if they have paid in error, the company said.
Consumers do not have to call AT&T to get a refund. If they do, they have the option of listening to a recorded message about the error, and AT&T has added call center staff to handle extra volume from consumers who wish to speak to a live representative.
"AT&T has implemented and is testing system corrections, and we are working diligently to ensure our billing capabilities perform flawlessly," the company said.