iPhone customer sues AT&T, claims data charges 'rigged'

California lawsuit alleges fraudulent business practices, seeks class-action status

A California man who owns an iPhone purchased through AT&T is suing the wireless carrier, claiming he's being illegally overcharged for data services.

According to Wired.com's Brian X. Chen, "the lawsuit seeks class-action status, alleging that AT&T is committing unlawful and fraudulent business practices by regularly overbilling customers for data transactions."

(Also see: AT&T tops all wireless carriers in customer dissatisfaction)

The complaint by Patrick Hendricks was filed in a U.S. District Court in Oakland, Calif., in late January, according to this pdf copy of the 10-page filing (not sure why we're only hearing about it now).

From the court document:

AT&T's billing system for iPhone and iPad data transactions is like a rigged gas pump that charges for a full gallon when it pumps only nine-tenths of a gallon into your car's tank. AT&T's systematically overstate the amount of data used on each transaction involving an iPhone or iPad account.

The suit alleges that "an independent consulting firm retained by plaintiff's counsel...found that AT&T bills systematically overstate web server traffic by 7% to 14% and in some instances by over 300%." Yowza!

Here's the most explosive allegation from the filing:

Not only does AT&T systematically overbill for every data transaction, it also bills for phantom data traffic where there is no actual data usage initiated by the customer. ...This is like the rigged gas pump charging you when you never even pulled your car into the station.

According to the filing, Hendricks has a usage-based data plan "that provides a 200 MB monthly allowance of data usage for $15 per month" and up to 10 gallons of gas. (OK, I made up the gas part.)

AT&T disputed the claim in a statement to Wired, saying in part that "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."

It'll be interesting to see how this case unfolds. Unless AT&T is totally vindicated, it's certainly not going to help its already industry-low reputation for customer satisfaction.

The backdrop to all of this is the broadband industry's transition from unlimited data plans to tiered pricing. Wired.com's Ryan Singel wrote recently that this shift is occurring for the most part not because of a desire to cut costs, but to address the problem of "congestion due to limited infrastructure."

Singel covers the broadband industry much more closely than I do, and I'm sure he's right about that -- as far as it goes. But since I don't trust any of these companies, I suspect it's also a matter of them rewriting the rules to their benefit once subscribers are locked into contracts with hefty termination fees.

By the way, did you ever notice that customers never get to arbitrarily change the terms of agreement? Just the corporations.

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