AT&T is being sued for systematically overcharging its iPhone and iPad customers for data transactions, primarily small charges which amount to millions of dollars in revenue for the wireless carrier.
"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," the suit alleged. "AT&T's bills systematically overstate the amount of data used on each data transaction involving an iPhone or iPad account.
According to the federal class-action suit, an independent consulting firm hired by plaintiff conducted a two-month study of AT&T's data usage billing practices, and discovered the carrier systematically overstated web server traffic by 7% to 14% -- and in some cases by more than 300%
As a result, an iPhone user who downloads a 50 KB website will typically be billed for 53.5 KB (a 7% price hike) to as much as 150 KB (a 300% overcharge). The suit also accuses AT&T of billing customers for non-use. "It gets worse," the suit charges. "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 claim was based on findings from the consulting firm, which purchased an iPhone from an AT&T store, closed all applications, disabled all notifications and services, deactivated the email and left it alone for 10 days.
"During this 10-day period, AT&T billed the test account for 35 data transactions totaling 2,292 KB of usage," the suit claims. "This is like the rigged gas pump charging you when you never even pulled your car into the station." Other tests by the consulting firm also purportedly showed that AT&T's billing system fails to accurately record the time and date of data usage, making it difficult for customers to track their usage and take advantage of their full allotment.
Although AT&T's alleged overcharges per customer are "modest," the suit says, the effect on AT&T's bottom line is "huge." AT&T has 92.8 million customers, and for the fourth quarter of 2010, reported a wireless data revenue increase of $1.1 billion, or 27.4%, from a year earlier. A "significant portion" of those revenues, the suit says, resulted from AT&T's "rigged billing system" for iPhone and iPad data usage.