updated 12:50 pm EST, Mon January 31, 2011
Carrier allegedly billing inactive phones
(Updated with AT&T response) AT&T is "systematically" overbilling iPhone and iPad users for data, a new federal class action lawsuit argues. "AT&T's bills systematically overstate the amount of data used on each data transaction involving an iPhone or iPad account," a document submitted on behalf of plaintiff Patrick Hendricks reads. The carrier's scheme is akin to 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 continues.
A consulting firm hired by Hendricks' lawyer is said to have conducted a two-month study, in which it found that web traffic was typically overstated by 7 to 14 percent, but potentially in excess of 300 percent. If an iPhone user downloaded a 50KB website for example, an AT&T bill might overstate the traffic as 53.5KB. The billed usage would potentially go as high as 150KB, the suit says.
AT&T is in fact billing customers when they aren't using data, Hendricks' lawyers allege. The consulting firm is noted to have bought an iPhone from an AT&T store and immediately turned off push notifications and location services, also making sure no apps or e-mail accounts were active. Leaving the phone inactive for 10 days is nevertheless said to have resulted in billing for 2,292KB of data spread over 35 transactions.
The suit suggests that while such practices will only have a "modest effect" on a single person, they may cumulatively help to pad a "significant portion" of AT&T's data revenues. Hendricks is accusing the carrier of breach of contract, unjust enrichment, unfair competition, unfair and fraudulent business practices, and lastly breaking the federal Communications Act. As compensation he is asking for restitution and class damages.
Although the iPhone and iPad both began their lives with unlimited data plans on AT&T, the carrier has since switched to a capped system. In the case of an iPhone, for example, overage charges begin to apply past a standard 2GB cap. AT&T is said to be allowing some people to switch back to unlimited data to prevent them from migrating to the Verizon iPhone, which launches February 10th.
Update: "Transparent and accurate billing is a top priority for AT&T," an AT&T representative has responded, speaking with MacNN. "In fact, we've created tools that let our customers check their voice and data usage at any time during their billing cycle to help eliminate bill surprises. We have only recently learned of the complaint, but I can tell you that we intend to defend ourselves vigorously."