While traveling through Canada you decide to use your mobile data card. You think you were being productive, but later discover AT&T Mobility has billed you for over $10,000 because you didn’t read—and understand—the legalese in your contract.
This is exactly what a colleague of mine did recently. Not only do the rates go up once you cross the border, the billing increment changes from MB to Kb! The net-net is mobile data service in while roaming Canada is 3000% the domestic rate. Yikes!
What’s a person to do? The charges are legitimate; albeit unconscionable no matter how one measures these things. For $10,000, Nilofer raised a stink with AT&T, did at least seven tweets on Twitter (here, here, here, here, here, here, and here)—as did Mythbuster’s Adam Savage when faced with the same situation—and got another colleague who follows the mobile market to write a lengthy blog post. $10,000 is worth fighting about, but what about people that just do email and run up $200-300 in charges? I bet the vast majority of them grumble, but end up paying. AT&T makes out like a bandit. Bwahaha.
Consumer always wins arbitration
OK, now for the rest of the story.
AT&T Mobility knows exactly what is going on, and yes, they do think their customers are suckers. It’s all there in the fine print. Not in the fine print regarding rates and fees, but rather in the section mandating arbitration of disputes. You see, AT&T knows their business practices are so beyond the pale that it employs “customer always wins” arbitration. You can read for yourself here (scroll down).
AT&T apparently makes enough money off of the suckers it has for customers that it is willing to absorb the occasional bit of bad press. There’s nowhere to run as all the other carriers operate the same scam. What AT&T is afraid of, are class-action lawsuits. Cue the “customer always wins” arbitration procedure.
While the AT&T contract mandates arbitration of disputes, AT&T pays all costs of arbitration, pays the consumer’s attorney fees if they prevail, and specifies a minimum payout of $7500, if the consumer wins. Reading between the lines, this tells you that AT&T simply settles nearly all disputes in favor of the consumer. AT&T gets to have its cake and eat it too. If you are dumb enough to pay your outrageous bill, AT&T will keep your money in the grand spirit of PT Barnum. If you decide to fight AT&T, they force you into an arbitration process which will end well for you. With a generous decision in your favor—delivered like clockwork—AT&T has erected a formidable defense against potential class-action lawsuits.
Arbitration clause is at risk
AT&T’s motives are so transparent that the Federal Ninth Circuit Court of Appeals recently upheld a District Court ruling declaring the arbitration terms are “unconscionable and unenforceable.” AT&T is currently appealing this adverse decision to the US Supreme Court.
It will be interesting to see what happens to international mobile data roaming charges if the current litigation prevails in striking down AT&T Mobility’s arbitration clause and AT&T is exposed to class-action lawsuits. My guess is the rates will come down. A lot.
Tags: AT&T, business model, consumer behavior, mobile data
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