AT&T hit with lawsuit that calls Administrative Fee a ‘bait-and-switch scheme’

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AT&T is now facing a class action lawsuit from customers who say the carrier is engaging in a “bait-and-switch scheme”.

According to the complaint that’s been filed in California, AT&T advertises flat monthly rates for its postpaid plans, but then charges higher prices than were promised when a customer actually signs up. The lawsuit says that AT&T “covertly increases the actual price” by adding a “bogus so-called ‘Administrative Fee'” of $1.99 to each phone line every month.

The complaint goes on to argue that this Administrative Fee isn’t disclosed to customers when they sign up for service and is “never adequately and honestly disclosed to them.” The fee is “intentionally buried” in a customer’s monthly bill from AT&T, the complaint says, adding that it’s placed in a section that “misleadingly suggests that the Administrative Fee is akin to a tax or other standard government pass-through fee, when it is simply a way for AT&T to advertise or promise lower rates than it actually charges.”

AT&T does have a section on its website that mentions the $1.99 Administrative Fee that’s at the focus of this lawsuit. On the page, AT&T says that it’s “charge assessed by AT&T that helps defray a portion of certain expenses AT&T incurs,” including charges AT&T pays to deliver calls to other carriers’ customers and charges associated with cell site rents and maintenance. AT&T goes on to acknowledge that the Administrative Fee is “not a tax or charge which the government requires AT&T to collect from its customers.”

The complaint responds to this statement, saying that it “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.” If this description were accurate, the complaint argues, then the fee “should be included in the advertised monthly price for the service because those are basic costs of providing wireless service itself, and thus a reasonable consumer would expect those costs to be included in the advertised price for the service.”

AT&T began charging this Administrative Fee in 2013, when it was a charge of $0.61 per line. The fee has increased in cost since then, but the complaint says that the stated costs that AT&T’s Administrative Fee is paying for (interconnecting calls with other carriers and cell site rentals) have decreased in that time, according to the carrier’s financial statements.

AT&T responded to this lawsuit by saying to Ars Technica, “The lawsuit is wrong. This is a standard fee, and we disclose it to our customers.”

The lawsuit is seeking class action status, and both former and current AT&T customers that’ve been charged the Administrative Fee can contact Hattis Law about it.

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