AT&T to pay $1.5M to settle D.C. lawsuit for overcharging on mobile service

AT&T agreed to pay $1.5 million to settle a lawsuit brought by D.C.’s Office of the Attorney General (OAG) related to overcharging the District and government entities for wireless voice and data services.

The D.C. OAG filed a complaint in February, alleging that AT&T knowingly charged for features, add-ons and other services that D.C. didn’t need and failed to comply with contract requirements to provide the most cost-effective and lowest price plans available.

AT&T denied the accusations but said it decided to settle the case.

“While we continue to dispute the allegations in this lawsuit, we settled this case to avoid drawn-out and expensive litigation,” AT&T said in a statement provided to Fierce.

The alleged overcharging happened over a six-year period from 2012 to 2018 and resulted in AT&T improperly billing millions of dollars, according to D.C.’s OAG. The contract covered accessories and equipment, in addition to mobile service.

“My office filed suit against AT&T to ensure that it fulfilled its contractual obligation to provide the District government with the least expensive cell phone and data services available. We are pleased that after filing suit, AT&T immediately sought to resolve the case in a manner that results in making the District and its taxpayers whole,” stated Attorney General Karl Racine in announcing the settlement.  

OAG claimed AT&T violated the District’s False Claims Act (FCA), investigating and intervening after the case was originally brought in 2018 by a contractor that owned a rate optimization firm.

The lawsuit claimed AT&T failed to take three main actions: produce quarterly price optimization reports; offer standardized base rate plans; and provide D.C. with the lowest cost available for these services.

For price optimization, regular reports are supposed to analyze and identify subscribers that are consistently getting overage charges or under-utilizing a service plan so they can be moved to either a more cost-effective or less expensive plan, respectively. According to the OAG, these are a common practice and known to save customers 20% to 30% on wireless service.

However, the complaint argued AT&T never recommended less expensive plans for mobile lines that were underutilized and that D.C. “regularly had upwards of 1,500 users with no activity on their accounts for months or even entire quarters during the relevant time period.”

AT&T did provide other reports, the OAG claimed, “often bearing false and misleading titles that included phrases like ‘plan optimization’ and ‘rate plan analysis’” but didn’t include the data or information needed to meet the contract requirements.

Since AT&T didn’t standardize plans, the amount D.C. entities were charged varied widely, and the government had to identify overbilling on an invoice-by-invoice or user line basis.

Some users weren’t set up with a data plan at all, which the OAG alleged resulted in “thousands of dollars” of overage charges for using data.

The lawsuit sought damages three times the amount of money that was allegedly overcharged, along with penalties for each faulty invoice submitted and other costs. It is unclear how much that total ultimately amounted to, other than than “millions of dollars.”