AT&T Mobility, VZW, Sprint Nextel Targeted in Gambling Class Action

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Legal Action Targets Text Messages Tied to TV Programs

The nation’s three largest wireless carriers have been hit with class action lawsuits accusing them of illegal gambling in connection text messaging tied to popular TV shows.

All three lawsuits were filed in the U.S. District Court for the Central District of California by a group of lawyers from California, Illinois and Pennsylvania.

The class-action lawsuits filed against Verizon Wireless, AT&T Mobility, Sprint Nextel and third-party content providers allege the mobile-phone operators enticed subscribers to engage in illegal gambling. The lawsuits center on 99-cent charges levied on wireless consumers who played contests associated with highly-viewed TV programs, including "Deal or No Deal” and "Sole Survivor.”

"At all times relevant during the liability period, the premium charge of 99 cents purchased nothing except a chance to win a prize. The games were not used as a sweepstakes to promote a product, but rather were illegal lotteries designed to generate revenues far in excess of the value of the cash awarded,” the lawsuits stated.

Verizon Wireless said it does not comment on pending litigation. AT&T Mobility and Sprint Nextel could not be reached for comment on the illegal gambling and fraud accusations.

The plaintiffs’ lawyers said the three cellular carriers’ premium text messaging was the main means — as well as well as the easiest and most expeditious manner — of entering the contests.

"The chances of winning are infinitesimally less than the odds posed by the number of choices offered," stated the suits. "Having placed their 99 cent wager with and through defendants along with hundreds or thousands (if not tens of thousands) of other subscribers, only those individuals who selected the correct answer are even entered into a subsequent pool of those who guessed correctly. From that pool of entrants, one random winner is selected to receive the cash prize. The first randomly selected potential winner for each episode that answers or returns the notification phone call is declared the winner (subject to verification and satisfaction of other miscellaneous conditions, such as proof of age)."

The lawsuits asserts Verizon Wireless, AT&T Mobility, Sprint Nextel and others violated California’s Consumer Legal Remedies Act and the state’s Unfair Competition Law.

Class-action ban challenged

Plaintiffs’ lawyers acknowledged service contracts the three carriers have with their subscribers include a class arbitration ban, but they maintain the litigation does not implicate such contracts and that such a ban is otherwise unconscionable and unenforceable.

On a related front, a class-action lawsuit moving forward in federal court in Washington state argues the class-action ban in AT&T Mobility’s service contracts should be invalidated.

"At stake here is the right of AT&T customers to get a fair hearing and obtain justice," said Harvey Rosenfield, a lawyer with the non-profit Foundation for Taxpayer and Consumer Rights. "If the court rules that AT&T and Cingular’s customers cannot join together to sue these companies, then the companies will never be held accountable."

Plaintiffs said that when then Cingular Wireless L.L.C. bought then AT&T Wireless Services Inc. in 2004, it promised regulators and the public that customers would continue to enjoy the same quality service. However, after the acquisition, according to the 2006 lawsuit, Cingular deliberately degraded the quality of the AT&T Wireless network in order to force AT&T Wireless customers to move to Cingular’s network, pay an $18 upgrade fee, buy new phones and sign up for new two-year plans. Dissatisfied consumers who wanted to move to a different company were required to pay early termination fees of $150 or more.

"AT&T makes much of the window-dressing terms it has tacked on to its arbitration clause to hide the impact of its class-action ban," said Leslie Bailey of Public Justice. "But we are confident that once the court looks at all the evidence, it will recognize that without a class action, these customers would not be able to hold the company accountable."

AT&T Mobility defended its approach to settling consumer grievances.

"We continue to believe that a consumer is better off pursuing a claim under our arbitration clause, rather than pursuing a class action," the No. 1 wireless carrier stated. "Arbitration is typically a fast, cost-effective, and pro-consumer way to address disputes, and AT&T’s arbitration agreement is among the most consumer-friendly in the nation."

"In fact," AT&T added, "a year and a half ago we changed our arbitration clause to make it even more consumer friendly. Our current arbitration clause calls for the company — if it does not settle a consumer complaint and loses arbitration — to pay the greater amount of either the arbitration or the state’s statutory definition of a small claim (commonly $5,000). Also, if the consumer has used a lawyer in winning an arbitration case, the company would pay two times the lawyers fees. Finally, we pay the entire cost of the arbitration.

Consumer Watchdog
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