Lawsuit claiming AT&T is overcharging iPhone and iPad data usage may not go to trial

The latest class action suit against the telecommunication giant for overbilling data usage may not ever go to court. Read on to find out why not.

Barry L. Davis, the lead lawyer on the class action suit against AT&T for "systematically overbilling" iPhone and iPad users, appeared on NBC's Today Show yesterday to share some details of the study that is at the center of the important case (video is below). However, the Supreme Court's April decision to uphold AT&T's user agreement that bars class action suits and forces individual arbitrations may prevent this case from going to trial.

Davis of Thornton, Davis & Fein, and Scott A. Bursor of Bursor & Fisher, are representing Patrick Hendricks and a class of similarly affected individuals in the suit before the United States District Court for the Northern District of California. They asked an IT consulting firm to study the billing practices of AT&T for iPhone and iPad data usage over a four-month period. In fact, the experts conducted the study using new devices and "disabled everything that could trigger data usage," according to Lisa Myers of MSNBC. When the engineer left an iPhone on but untouched for 10 days and compared the usage to the AT&T bill,  was charged for 35 transactions "totaling almost 3,000 KB," said Davis.

Here are the other claims in the suit as described in the press release:

  • AT&T bills systematically overstated data usage by 7 to 14 percent, and in some instances by more than 300 percent. For example, an IPhone user who downloads 50 KB would actually be billed for 53.5 KB to as much as 150 KB.
  • AT&T bills for "phantom" data when phones weren't even in use.
  • Tests by the consulting firm indicated that AT&T's billing system did not always record the correct date and time of the data usage, causing transactions to be posted to the wrong billing cycle.

In response, AT&T's spokesperson Mark Siegel has denied the claims in this suit in an email statement:

We properly charge for all data that our customers send and receive, including data activity that runs in the background on smartphones and other powerful data devices. Accurate billing is clearly important and, unfortunately, there have been some incorrect claims about our data usage billing practices.
Particularly for smartphones, tablets and other advanced mobile devices, applications are often constantly running in the background and engaged with our network. And AT&T captures your data activity nightly to create a bill record in our systems. This will appear on your bill to be a late night 'charge,' but in fact, the time stamp reflects the time that your device established a connection to the network, not the time that you sent or received data.

To make matters worst, when AT&T consumers sign their names to receive the latest phone at a reduced price, they also agree to not participate in class action suits against AT&T in the user agreement, as was the case in AT&T Mobility LLC v. Concepcion. (Read Ars Technica's break down of that Supreme Court decision here.) As a result, so no matter how significant this class action lawsuit is for all AT&T iPhone and iPad customers, it may not get as far as the courthouse, and therefore may not set a precedent for future suits. What a shame for consumers.
Data plans are expensive enough that customers should be vigilant about their usage and take AT&T to task when they don't understand their bills, or feel they are being unfairly charged for usage they did not initiate. In my opinion, there should be better education for consumers about how apps and games really work on their phones so they can make an informed decision on their usage before they click. Of course, I doubt telecoms like AT&T would bother because they want people to rack up their data limits to line their own pockets.
Do you monitor your data usage bills from AT&T? Have you noticed any discrepancies?

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[Source: StreetInsider.comMSNBC, Dayton Business Journal]

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