Attorney General Cuomo Obtains $2.63m Agreement With AT&T Over Deceptive Advertising In Mobile Phone Rebate Offers

WHITE PLAINS, N.Y. (March 3, 2009) - Attorney General Andrew M. Cuomo today announced a $2.63 million agreement with AT&T Mobility over a misleading and deceptive sales promotion involving rebate offers that were fulfilled with onerous and condition-laden rebate cards.

The Attorney General’s agreement requires AT&T to provide more than $2.63 million to consumers who received rebate cards from AT&T in fulfillment of its rebate offers on cellular phones and other wireless equipment and services.

“AT&T, as one of this country’s leading companies, has a responsibility to be forthright with its clients and not rely on deceptive practices to increase profits,” said Attorney General Cuomo. “I commend them for recognizing the problems with this advertising campaign and reaching an appropriate settlement with my office.”

Since 2005, AT&T Mobility, LLC, headquartered in Atlanta, Georgia, has been fulfilling its rebate offers with rebate cards instead of checks. These cards were portrayed as debit cards in the amount of the rebate offer. However, the cards were not redeemable for cash, could not be used for cash withdrawals and expired 120 days from issuance. The Attorney General’s Office found that AT&T failed to adequately disclose the card’s conditions and limitations in its marketing materials for the promotion. AT&T also deceived consumers with offers for “free” products when, in fact, consumers had to pay the full price up-front and then submit a mail-in rebate form from which they were sent the aforementioned rebate card with its accompanying limitations.

In addition to the $2.63 million to consumers, the Attorney General’s settlement requires AT&T to clearly disclose all the terms, conditions and limitations of any rebate offers and cease referring to the cards used to fulfill the rebate offers as “debit cards” in its advertising unless the cards are redeemable for cash. The agreement also requires AT&T to clearly disclose any conditions in marketing and advertising materials.

Consumers potentially eligible to receive funds will be notified by AT&T. Qualifying consumers will receive new rebate cards that are fully protected under the terms of the New York State Gift Card Law and which may be used both to purchase products and services anywhere that VISA cards are accepted, and to pay consumers’ AT&T wireless bills.

AT&T cooperated fully in the investigation. The case was handled by Assistant Attorney General Doris K. Morin and Assistant Attorney General-in-Charge of the Westchester Regional Office Judith C. McCarthy with assistance from Senior Investigator John Slevin, in conjunction with Bureau Chief for Consumer Frauds and Protection Joy Feigenbaum and Deputy Attorney General for Economic Justice Michael Berlin.