FCC fines AT&T $700,000 for prepaid switcheroo

The Federal Communications Commission charged telecommunications giant AT&T with switching wireless prepaid customers to monthly data plans, despite telling those customers that they could keep their pay-as-you-go plans. AT&T agreed to pay $700,000 to the U.S. Department of the Treasury and refund customers who paid for monthly data plans, which could range from $25 to $30 per month, the FCC said.

The FCC reported that AT&T made monthly plans mandatory in September 2009 for first-time AT&T users and for AT&T subscribers who upgraded phones. But AT&T smart phone users with prepaid plans who kept their old phones had the option to keep their pay-as-you-go data plans. "Some consumers who replaced these phones under warranty or insurance, or who moved to a new residence were switched to the monthly plans, even though AT&T had said the 'grandfathering' policy would continue to apply in these situations," according to the FCC.

Along with the monetary penalty and refunds, AT&T also agreed to an extensive compliance program, including consumer notifications, training of customer care representatives and periodic compliance reports to the FCC. AT&T must also conduct additional searches of its records to identify improperly switched consumers and ensure appropriate refunds, the FCC said.

The FCC launched an investigation into the matter in 2011, following consumer complaints. "Today's action sends a clear signal that wireless carriers can't wrongfully charge consumers," said FCC Chairman Julius Genachowski. "These strong FCC accountability measures will ensure customers are not over-charged."

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