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AT&T Defends ‘Consumer-Friendly’ Arbitration Practices After Franken Letter

AT&T headquarters is shown in San Antonio on March 5, 2006. (AP Photo/Toby Jorrin)

WASHINGTON – AT&T is defending its “consumer-friendly” arbitration practices after Sen. Al Franken (D-Minn.) and four other senators claimed last week that the telecommunications giant is muzzling thousands of consumer complaints through forced arbitration.

Franken joined Sens. Richard Blumenthal (D-Conn.), Ron Wyden (D-Ore.), Patrick Leahy (D-Vt.) and Edward Markey (D-Mass.) last week in penning a letter to AT&T. The letter was written after a CBS News report revealed that 4,200 customers filed complaints over the past two years alleging that the company failed to honor promotional deals and in turn overcharged customers.

The senators insinuate that because of forced arbitration clauses included in customer contracts that prohibit class-action settlements, many of the complaints have gone unaddressed and unresolved. According to CBS, only 18 AT&T customers sought resolution through the company’s forced arbitration system.

“As consumers face rising prices for telecommunications services, they deserve accuracy and transparency about the litany of fees and charges associated with such services and a meaningful opportunity to seek accountability when they’ve been deceived by a provider,” the senators wrote to AT&T CEO Randall L. Stephenson. “We believe there exists the potential for many consumers’ claims going unheard because of AT&T’s insistence on forced arbitration as the only way for customers to resolve disputes with the company.”

An AT&T spokesman wrote in an email Thursday that experience shows, “and independent research confirms,” that consumers benefit more from independent arbitration than lawyer-driven class action. The spokesman also noted that AT&T’s practices have been “widely recognized” as one of the “most consumer-friendly arbitration policies in the country,” citing a California Central District Court judge’s remarks in 2009. Additionally, the vast majority of consumer claims are resolved before arbitration begins, the spokesman wrote.

AT&T earned a major victory in 2011, when the Supreme Court allowed AT&T and other companies to contractually block class-action arbitration, so long as disputes are settled through individual settlement. The AT&T spokesman noted on Thursday that individuals seeking small claims can reach a resolution because the company pays arbitration costs. The company’s guidelines also dictate that AT&T pays the customer a $10,000 premium if the arbitrator awards the consumer more than the final settlement offer. In addressing the CBS News report, the spokesman noted that promotional offers vary in terms of pricing and duration.

“If a customer signs up for one of these offers, we fully honor the terms through the promotion’s completion,” the spokesman wrote. “Customers who enrolled in one of our promotional offers and believe they did not receive the full benefits should contact customer service.”

The senators’ letter argues that forced arbitration practices included in AT&T contracts erode opportunities for justice by forcing consumers “into a privatized system that is inherently biased in favor of providers and which offers virtually no way to challenge a biased outcome.” The contracts force consumers to sign away their constitutional rights, the lawmakers contend, arguing that most customers lack the means or will to battle large corporations alone in arbitration.

“This is particularly troubling in the telecommunications context when consumers can be overcharged for relatively small amounts of money, but when multiplied over a large base of affected customers, can amount to millions of dollars,” the lawmakers wrote.

The senators asked that AT&T provide copies of the arbitration clauses, details on the number of complaints the company has received concerning potential overcharges over the past two years and information on the average dollar amount awarded through arbitration. The senators also asked how AT&T is responding to the CBS News report to ensure promotions and deals are honored.