AT&T Sued For Overbilling Data Usage - InformationWeek

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5/23/2011
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AT&T Sued For Overbilling Data Usage

A class action lawsuit accuses the carrier of billing users for consuming as much as 300% more than was actually used.

With the rapid demise of unlimited data plans, more and more users are on plans that allow a fixed amount of data per month before extra data charges are incurred. Users need to feel confident that when they buy a data plan, the meter the carrier is using is accurate. Some AT& users feel that isn't the case and a law firm has backed up that assertion.

To understand how much going over your data plan can cost you need to know what the plans are. AT&T has number of data plans depending on what you want to do. The $29.99 all-you-can-eat plans are gone and have been replaced by 200-MB, 2-GB, and 4-GB plans. Let's look at the 2-GB plans. For the 3G iPhone 4, a 2-GB plan costs $25 per month. If you go over, AT&T starts charging an additional $10 per 1 GB of data. It isn't prorated at all, so if you consume 2.1 GB, that extra 100 MB will cost $10. Data isn't carried over month to month either. Note that the cost to AT&T for that extra 100 MB is completely variable, so by charging you for the extra 900 MB, they pocket a tidy amount of profit for a service never rendered. All carriers do this though, not just AT&T.

Buying a newer 4G phone will cost you considerably more if you go over. The 2-GB plan is $25, just like the 3G plan, but you get charged an additional $15 per 200 MB of data. If you opt for the $45 4-GB plan, it is much cheaper to go over, costing $10 per 1 GB of data. This is designed, of course, to get you into the more expensive plan. Once you hit 2.4 GB of data on the 2-GB plan, you'll have paid $55, more than the 4-GB plan.

You can see that accurate data measuring is essential. Ars Technica details how a law firm measured charges in preparation for the class action lawsuit. The suit claims that users are charged data at odd hours of the night when the phone is not in use, calling these phantom charges. On average, usage was 7% to 14% above actual usage. If you legitimately use 1.9 GB of data in a billing cycle, 7% will push you over a 2-GB limit incurring an overage charge.

To ensure the phantom charges were real, engineers that were hired by the firm set up a fresh iPhone with no push notifications, no email accounts configured, and all location services disabled. They basically stuck it in a desk for 10 days and then checked the billing. AT&T showed 35 instances of data transfers totaling over 2 MB.

AT&T has refuted the claim, saying users just misunderstand how their phones use data and how AT&T bills it. Most of the timestamps, for example, are when AT&T's systems record the charges, not when they happened, so a 2 a.m. data charge may just be that 9 p.m. clip you watched in your Tosh.0 app.

The problem is there is no independent third-party measuring and auditing these records. The National Institute of Standards and Technology has a Weights and Measures division that works with consumer products companies and individual state's weights and measures enforcement agencies to ensure consumers are charged properly. When you buy things like a gallon of gas, a pound of sugar, or an eight-foot piece of lumber, some agency with enforcement powers has verified the measurement device is accurate.

The world has moved on though and these agencies often aren't involved in measuring talk time on your cell phone or data used from your carrier or Internet service provider. When you disagree with a bill, there is no appeal process--you are at the mercy of the customer service rep you manage to get in contact with. Armed with a detailed report from their system, they aren't likely to budge.

Hopefully the suit will bring this issue to light and provide some remedy that will give consumers assurance that data calculations are accurate, and cause financial penalties to service providers when their systems overcharge.

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