AT&T accused of charging hidden fee

AT&T (T) has been sued in California on accusations that it secretly overcharges its wireless customers in an attempt to fatten its bottom line. According to a report from Ars Technica, two AT&T customers in California recently filed a lawsuit in a federal court in the state where they accused the company of charging customers more than the advertised rates for its wireless plans. The lawsuit specifically refers to what AT&T describes as the “administrative fee” in customer bills.

The administrative fee was introduced in 2013 at the rate of $0.61 per month and has risen steadily and now costs $1.99 per month. The lawsuit claims that AT&T doesn’t tell customers about this charge when they sign up for its wireless service. But the company has countered, stating that it has always made its customers aware of the administrative fee requirement.

AT&T Hit by Potentially Costly Lawsuit

Class-action status

The plaintiffs are seeking class-action status for the lawsuit to represent all AT&T customers in California. If the lawsuit achieves class-action status, the burden for AT&T would be enormous if it loses the battle.

AT&T made a profit of $4.1 billion. T-Mobile (TMUS) and US Cellular (USM) posted profits of $908 million and $54 million in the first quarter, respectively. Frontier Communications (FTR) and Sprint (S) suffered losses of $84 million and $2.2 billion in the first quarter, respectively. A court loss that forces AT&T to reduce what it charges customers for its wireless service would adversely impact the company’s profitability.

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