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AT&T hit with class action lawsuit over iPhone, iPad data overcharges

A man in California has filed a class action lawsuit against AT&T, alleging that the company’s monthly bills to customers “systematically overstate web server traffic by 7% to 14%,” and in some instances by as much as 300 percent. The complaint specifically addresses AT&T accounts linked to iPads and iPhones. “AT&T’s billing system for iPhone and iPad data transactions is like a rigged gas pump that charges for a full gallon when it pumps only nine-tenths of a gallon into your car’s tank,” the complaint reads.

According to the suit, plaintiff Patrick Hendricks hired an independent consulting firm to investigate AT&T’s billing methods. The suit gives an example where a 50KB website was downloaded using an iPhone, but the user would be typically be billed for 53.5KB of data, a 7 percent overcharge, and sometimes for as much as 150KB, a 300 percent overcharge.

The suit goes on to claim that AT&T not only overcharges customers, but also bills for “phantom data traffic when there is no actual data usage initiated by the customer.” The complaint alleges that this second offense was uncovered after the consulting firm purchased an iPhone from AT&T and then disabled all push notifications and location services, closed all applications, and did not configure an e-mail account. The phone was left untouched for 10 days during which AT&T billed the device for 35 data transactions totaling 2,292KB of data usage, the complaint alleges.

Hendricks is an AT&T iPhone customer with a 200MB data plan that costs him $15 a month. According to the suit, during his October-November billing period Hendricks exceeded his monthly data allowance by 23MB, resulting in an additional $15 fee. “Many of these charges were for phantom data transactions that either never happened or were never initiated or experienced by Mr. Hendricks,” the complaint says. “The remainder of these charges were systematically inflated in terms of the actual amount of data used.”

The suit says that the while the alleged overcharges have a “modest effect” on individual customers, the additional money generated from inflated billings has had a “huge effect” on AT&T’s data revenue. The complaint accuses AT&T of breach of contract, unjust enrichment, unfair competition, and unfair and fraudulent business practices in violation of the Unfair Competition Law in the California Business and Professions Code. Hendricks is seeking restitution for the overcharges as well as compensation for punitive damages for the alleged illicit business practices.

An AT&T spokesman responded to the suit in a comment to PC World: “We have only recently learned of the complaint, but I can tell you that we intend to defend ourselves vigorously. Transparent and accurate billing is a top priority for AT&T.”

AT&T dropped its unlimited data option back in June of last year and began instead offering capped data plans. The company’s tiered data plans include a 2GB option for $25 a month and  a low-end 200MB plan for $15 a month. Users who exceed their limits incur additional fees on their monthly bills. AT&T is reportedly offering some customers a chance to revert to unlimited plans.