Suit: AT&T Rigs Bills for iPhones, iPads

SAN FRANCISCO — In another suit over iPhone and iPad services, AT&T Mobility has been hit by claims that it systematically overstates data numbers for each transaction and that it bills phantom data traffic.

The suit, waged by plaintiff Patrick Hendricks who seeks class action status, says AT&T's billing system "is like a rigged gas tank that charges for a full gallon when it pumps only nine-tenths of a gallon into your car's tank."

AT&T has faced a barrage of class claims since rolling out iPhone service with Apple, which is not named as party in the suit.

Other class claims alleged AT&T charged for downloads its customers never made, reneged on billing plans for iPhones and charged for services it could not or did not deliver. It also faced a challenge from consumers who couldn't send text messages and photos.

In the latest suit, Hendricks says he hired independent consultants who found that AT&T bills customers for data transactions even if they disable their phones and leave them untouched.

Hendricks claims that AT&T's overbilling "was discovered by an independent consulting firm retained by plaintiff's counsel, which conducted a two-month study of AT&T's billing practices for data usage, and found that AT&T systematically overstated web server traffic by 7 percent to 14 percent, and in some instances by over 300 percent."

"So, for example, if an iPhone user downloads a 50 KB website, AT&T's bill would typically overstate the traffic as 53.5 KB (a 7 percent overcharge) to as high as 150 KB (a 300 percent overcharge).

"It gets worse. Not only does AT&T systematically overbill for every data transaction, it also bills for phantom data traffic when there is no actual data usage initiated by the customer.

"This was discovered by the same independent consulting firm, which purchased an iPhone from an AT&T store, immediately disabled all push notifications and location services, confirmed that no email account was configured on the phone, closed all applications, and let the phone sit untouched for 10 days.

"During this 10-day period, AT&T billed the test account for 35 data transactions totaling 2,292 KB of usage.

Hendricks says AT&T's overcharges "have a modest effect on an individual customer's bill, [but] they have a huge effect on AT&T's bottom line."

And a significant portion of those data revenues were inflated by AT&T's rigged billing system for data transactions, Hendricks says.

"AT&T has 92,8 million customers. In the fourth quarter of 2010, AT&T reported its wireless data revenues increased $1.1 billion, or 27.4 percent, from the year-earlier quarter, to $4.9 billion."

With the case, Hendricks seeks restitution and class damages, breach of contract, unjust enrichment, unfair and fraudulent business practices, unfair competition, and violations of the federal Communications Act.