Lawsuit accuses AT&T of running a "bait and switch scheme"

Spotted first by Ars Technica, a class action suit was filed against AT&T last week in U.S. District Court for the Northern District of California. The plaintiffs claim that the nation's second-largest carrier is using a "bait and switch scheme" by charging customers a "bogus so-called 'Administrative Fee' of $1.99 per month. The filing notes that the fee is not mentioned in AT&T's advertised prices.

The plaintiffs complain that AT&T is hiding the fee in its customer invoices and "misleadingly" portrays the charge as a tax or a government fee. But in the filing, AT&T is accused of calling the $1.99 monthly charge an administrative fee so that it can advertise a monthly rate that is lower than the amount that its customers really pay. And while the wireless provider does mention the fee on its website, the suit states that the information is buried "deep within" the site and "serves to further AT&T’s deception and scheme by suggesting that the Administrative Fee is tied to certain costs associated with AT&T providing wireless telephone services (interconnect charges and cell site rental charges)." The plaintiffs make the point that if the carrier's description of the fee is correct, the $1.99 should be included in the advertised monthly cost of the plan.

AT&T admits on its site that the fee is not a tax, nor is it required by the government even though it is listed in customer invoices under the section marked "Surcharges & Fees." This adds to the illusion that the $1.99 paid by AT&T customers each month is a tax or government fee. And AT&T customers allegedly are not informed of the fee until they receive their first invoice after they have subscribed to the plan.

AT&T originally added a 61 cent administrative fee back in 2013; at the time, we pointed out that this would bring the carrier an additional $500 million in revenue. The fee has been subsequently raised three times by the carrier to the current rate. The company's website notes that the fee "is subject to change from time to time as AT&T's costs change." In its defense, AT&T says, "The lawsuit is wrong. This is a standard fee, and we disclose it to our customers."

The plaintiffs ask the court to issue an injunction against AT&T to prevent the company from "falsely advertising" the prices of its wireless plans and hiding the real costs. They also want the court to certify the suit as a class action, and order that AT&T pay damages and restitution to the plaintiffs and members of the class.

If you are an AT&T customer who has been paying the administrative fee each month, you can get in touch with the attorneys handling the case by clicking on this link.