Florida Attorney General Bill McCollum has reached an agreement with T-Mobile concerning unauthorized billing for third-party charges on consumers? mobile phone bills.

The settlement, the latest in a continuing series of enforcement action in the mobile space by the Florida Attorney General's office, is very important to mobile marketers because it requires the implementation of a series of detailed "best-practice" standards that impose significant compliance obligations on those involved in marketing mobile content.

"The settlement is the third in a continuing series of enforcement actions against mobile carriers relating to the charges assessed by third-party mobile content providers on customer?s phone bills," said Andrew Lustigman, principal partner of The Lustigman Firm, New York. "The settlement requires T-Mobile to enforce what the state has determined to be various best practices regarding the advertising and marketing of content provider services. 

"Because the content providers cannot bill without going through the carriers, by these settlements Florida has indirectly imposed upon these restrictions on the content providers without being formally included in the settlement process," he said.  

The Attorney General?s best practices are meant to protect consumers from third-party ?cramming,? including charges for ?free? ringtones and other mobile content customers either did not order or did not realize would result in a monthly charge.

T-Mobile will continue its practice of issuing credits and refunds to consumers for unauthorized charges for third-party mobile content subscription purchases.

As part of the agreement, the company will provide a clear and conspicuous notice to all consumers of their continuing ability to obtain refunds.

Mobile phone content includes ringtones, music, wallpaper, horoscopes and other material that is often promoted by online marketers as ?free,? but ultimately ends up costing up to $19.99 a month.

The charges appear on a subscriber?s monthly wireless bill and are usually recurring. The bill charges often appear under indiscernible names such as ?OpenMarket,? ?M-Qube? or ?M-Blox.?

A large number of complaints related to the mobile content industry led to an investigation which revealed that thousands of Florida consumers had received these charges on their mobile phone bills for mobile content downloads that they neither knowingly authorized nor desired.

Prior to the investigation, T-Mobile offered its customers the ability to block third-party mobile content and to implement parental controls free of charge.

The investigation and subsequent settlement have been negotiated by the Attorney General?s CyberFraud Section of the Economic Crimes Division.

T-Mobile has agreed to continue using the standards previously established by the Attorney General for advertising on Web sites, prohibiting the use of the word ?free? without clear disclosure of the actual price and requiring all content providers and advertisers to clearly and conspicuously disclose the true cost of cell phone content.

These compliance standards, which include Web site design restrictions for online advertisers, will ensure consumers see and understand the terms and conditions of the purchase.

T-Mobile will continue to enforce these standards through its contracts with all content providers and advertisers nationwide.

As part of the settlement, the company will pay a total of $600,000 to reimburse the state for the costs of its investigation and to help the Attorney General?s Office fund the efforts of the CyberFraud Section as it continues working toward similar reform across the industry.

The agreement was negotiated with full cooperation from T-Mobile.

The Attorney General?s Office has already obtained several settlements resulting in millions of dollars of restitution for consumers with players from each part of the industry, including marketers, billing aggregators, content providers and wireless service providers.

T-Mobile is the third wireless provider to adopt these standards, with Verizon and AT&T already been involved in these types of cases.

Verizon Wireless reached an agreement in June 2009 and AT&T Mobility reached the first agreement in February 2008.

"Because these advertising campaigns are plainly national in scope and not state specific, the Florida requirements will as a matter of default, become a national standard," Mr. Lustigman said. "As a result, a de facto national policy is being determined by one state. 

"While Florida?s goals are well intended, this policy is unfortunately being created without the benefit of input from the federal regulatory authorities, industry, or the general public," he said. 

Final Take

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