FTC is Providing Refunds to AT&T Customers for Mobile Cramming Practices

AT&T allowed for the placement of bogus charges on their customer’s wireless bills going back to 2014. This practice is known as mobile cramming. Back in 2016, AT&T paid back $88 million in refunds as a settlement with the Federal Trade Commission (FTC) in the United States (Federal Trade Commission, 2016).

Do you check your wireless bill for extra charges every month? Most people pay their bill without checking for extra charges that are disguised to look like taxes or service fees from AT&T.

Most of the 2.7 million AT&T customers received charges from third parties that AT&T passed through and took a 35% cut. The problem was made worse when AT&T restructured their wireless bills which obfuscated the charges under an AT&T section heading (Consumer Reports, 2014). The mobile cramming scheme got noticed by the FTC after it received an increase in customer complaints from AT&T customers. To protect its customers, AT&T stopped third-party billing for premium text message services. To further restore trust, AT&T paid back an average of $31 statement credits for each customer that had third-party service charges.

Mobile cramming is considered fraud, but it is not tied to a specific law. In the AT&T case, the mobile cramming scheme was noticed by customer complaints. Some customers who noticed the charges call into AT&T where the customer representatives were instructed to give a 2-3 month refund of the charges back to the customer (Consumer Reports, 2014). Many customers didn’t even notice the extra charges. The FTC accused AT&T of obscuring the charges and taking a commission. Two of the third-party companies named in the settlement were Tatto and Acquinity. In both cases, the companies conducted illegal robocalls, messages, and added charges on their wireless bills. The charges showed up as premium text messaging services on the AT&T wireless bill.

Building customer trust is critical for a mobile marketing campaign. Companies need to be transparent about the mobile tactics they are using, how they are using customer data, and how they are securing customer data. It is more important for a company like AT&T to be upfront with their billing than to hide it, for example. The mobile cramming scheme erodes confidence even though the actions may not be tied to a specific law. The scheme is unethical and the companies are not holding themselves to a professional standard. Laws like GDPR in the European Union are being enacted and will continue to become more prevalent around the world. GDPR attempts to protect the user’s data and give them control of their data (Karnik, 2018). Mobile marketers can live up to a higher professional standard by making everything an opt-in for a mobile marketing campaign. Get the customer’s permission to do anything. Let them in on the process. Mobile marketing is personal and needs to build on trust.


Consumer Reports. (2014, October 16). AT&T Settles Unauthorized Charges Allegation – Consumer Reports News. Retrieved April 12, 2019, from https://www.consumerreports.org/cro/news/2014/10/refunds-available-to-some-at-t-cell-phone-customers/index.htm

Federal Trade Commission. (2016, December 8). FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming. Retrieved April 12, 2019, from https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were

Karnik, A. (2018, May 09). How Will GDPR Affect The Mobile Marketing World? Retrieved April 12, 2019, from https://www.forbes.com/sites/forbescommunicationscouncil/2018/05/09/how-will-gdpr-affect-the-mobile-marketing-world/#432c9a2f6808

Marketing Advantages of Mobile Phones

I always have my phone with me. It happened slowly, but I have come to rely on my phone for almost every aspect of my day. I use my phone as an alarm clock. I use it to navigate through Boston traffic to find the best way to daycare and then on to work. At work, I use it to track my meeting schedule and to send quick replies to colleagues. At night, I watch Pittsburgh Penguin hockey games, watch the Daily Show, or read the news before I go to sleep. In 2018, I had my phone 363 days out 365 days. On one of those days, I forgot my phone at home. On the other day, I was waiting for a new phone to be shipped from Google after my phone crashed.

If you want to target me, you have to target my phone. It is what I have with me all day and the most reliable way to have your marketing message reach me. I am rarely browsing the web on a desktop or watching regular TV. 95% of Americans now have a cellphone of some sort and 77% have a smartphone (Pew Research Center, 2018). Any marketing strategy and plan has to account for mobile phones and the new advantages that they present to marketers as traditional marketing channels are becoming fragmented.

1. Follow Your Customers

Customers are going mobile. They are using smartphones for everyday tasks to communicate, navigate, buy things, and pass time. Your marketing strategy needs to have a mobile focus to target apps and websites that get served up on mobile phones and tablets. Even as painful as sitting around at an airport is, the airline industry is deliberately leveraging the mobile phone to improve passenger experience and provide a marketing channel to their partners using real-time notifications and apps (Florido-Benítez, 2018). If you follow your customers, you will incorporate mobile phone marketing into your marketing mix. The customer can be anywhere, but they will have their mobile devices with them.

2. Build a Useful App

If you have a product or service, you can target mobile users using a native app with push notifications or using SMS. People tend to read 95% of their text messages versus 22 percent of their email (Wachs, 2013). My incorporating notifications, you can get the word out about your products and services and consistently be able to reach your audience.

The challenge for marketers is to give the customer a reason to install your app or opt-in to SMS notifications. One compelling way to do this is to incorporate loyalty programs into your app (Fulgoni & Lipsivian, 2016). Customers are more likely to download and install your app to earn points to get exclusive offers. For things that I consume almost every day like Dunkin, I use their app to pay for coffee and earn points. They regularly send me notices about free drinks that I have earned or specials they have when I am near one of their stores.

Being silenced is another constraint that mobile marketing faces. Users control their notifications settings and your well-intentioned app could be silenced. The customer may never see your messaging or have a reason to open your app. In situations like these, it’s important to have other ways to communicate your updates. In 2018, Dunkin redesigned its mobile app, push notification strategy, and pay by app options after complaints that the app is slow and noisy (Wohl, 2015). Dunkin was able to get the word out about their new app using social media, billboards, and tech blogs.

3. Profit

If you follow your customers and incorporate mobile marketing strategies into your marketing mix, you will be successful at keeping your customers engaged and coming back for more products and services. If you give your customers a reason to install your app and opt-in to notifications with meaningful interactions, you will be able to seamlessly target them and build a strong, recurring engagement.


Florido-Benítez, L. (2016). The impact of mobile marketing in airports. Journal of Airline & Airport Management, 6(1), 1–18. https://doi-org.ezproxy.snhu.edu/10.3926/jairm.39

Fulgoni, G. M., & Lipsivian, A. (2016). The Future of Retail Is Mobile. Journal of Advertising Research, 56(4), 346–351. https://doi-org.ezproxy.snhu.edu/10.2501/JAR-2016-041

Pew Research Center. (2018, February 05). Demographics of Mobile Device Ownership and Adoption in the United States. Retrieved March 17, 2019, from http://www.pewinternet.org/fact-sheet/mobile/

Wachs, D. (2013, May 09). Five reasons you should be using SMS based marketing. Retrieved March 8, 2019, from https://venturebeat.com/2013/05/08/five-reasons-you-should-be-using-sms-based-marketing/

Wohl, J. (2015, October 19). Dunkin’ Donuts Tells Customers Its App Needs a Jolt. Retrieved March 17, 2019, from https://adage.com/article/cmo-strategy/dunkin-donuts-tells-customers-app-a-jolt/300978/