Credit challenged AT&T customers may be out hundreds of dollars if they fail to understand the difference between AT&T’s service deposit and a “credit management fee” for new customers. 

For years, postpaid customers with damaged/no credit have been asked by AT&T employees to post a significant deposit to establish service. For many U-verse and cell phone customers that amount can reach $449 or more. Customers complain AT&T sales employees rarely explain whether they are being asked to put down a refundable deposit or being billed AT&T’s novel “credit management fee,” especially after they are reassured the “deposit” will eventually be returned to customers.

In Ohio, one customer is upset that AT&T has misrepresented its $449 one time “credit management fee” as a refundable deposit and claims AT&T now wants to keep that money for itself, despite his perfect payment record.

Michael Tedesco told FOX 28 in Columbus when he signed up for cable provider AT&T, he was required to spend $449 towards a deposit to get U-verse service activated.

“I was 19 and didn’t have any established credit, so they told me I had to put down a deposit,” said Tedesco. He claims AT&T promised to return $5 of that money each month as a credit on his bill, which means Tedesco would receive his full deposit back only after approximately 7 1/2 years of staying with AT&T. Tedesco also claimed AT&T promised to immediately return the balance of any remaining deposit if he canceled service.

But that isn’t what happened.

“I’d been with them for two years, so that’s $120,” said Tedesco. “So $329 should be returned to me. But now they’re saying they changed their story. That it’s a non-refundable fee.”

AT&T’s non-refundable “Credit Management Fee” is often called a deposit by AT&T’s salespeople. But it isn’t.

A Google search about the non-refundable nature of AT&T’s “deposit” has revealed considerable controversy over AT&T’s “credit management fee” and how it is represented by AT&T employees trying to make a sale. When customers return to complain, they are told to read AT&T’s voluminous terms and conditions, which claim the fee might or might not be refundable.

Telecom companies have traditionally used refundable deposits as a way to insure themselves against a customer considered more likely to default on their bill. For decades, phone companies usually returned deposits back to customers, with interest, after 12-24 months of a satisfactory payment history.

AT&T has instead turned that insurance protection into another way to earn revenue for itself, and critics contend AT&T employees are misrepresenting the costly fee and how customers can get it back.

An AT&T spokesperson admitted shareholders come before customers.

“The credit management fee is in place to cover the upfront cost of service while protecting our shareholders against loss in the event a customer isn’t able to pay their bill,” wrote the spokesperson in a written statement. AT&T also claimed it tells customers up front it is not a deposit. “We communicate to these customers before they sign-up that this is a one-time non-refundable fee.”

If AT&T returns a portion of its “Credit Management Fee” at its discretion, it comes in $5 increments, which means it will take over seven years to get your money back.

The Ohio Attorney General has little power over AT&T’s contracts, language, or sales practices, and offered that consumers need to protect themselves from companies like AT&T.

“It’s helpful to ask things like ‘is there a schedule of when money will be credited to my account? What happens if I leave? How long do I have to stay with the company?'” Melissa Smith, from the AG’s Consumer Division, told the Columbus FOX affiliate. “But what’s most important, no matter what that operator says, is to make sure it lines up with what’s in the contract.”

In dozens of pages of terms and conditions for AT&T’s products and services, the relevant language is found under the Billing section (emphasis ours in the language below), and it is highly confusing because it conflates a traditional deposit program with AT&T’s newer, non-refundable “credit management fee,” making it next to impossible for consumers to understand which applies  until after their first bill arrives:

Advance Payments, Deposits, Fees and Limits.

We may require you to make deposits or advance payments for Services, which we may use to satisfy your initial bill for Services, to offset against any unpaid balance on your account, or as otherwise set forth in these TOS or permitted by law. Interest will not be paid on advance payments or deposits unless required by law. We may require additional advance payments or deposits if we determine that the initial payment was inadequate. Upon determination solely by AT&T of satisfactory payment history or as required by law, AT&T may begin refunding of the deposit or advance payment through bill credits, cash payments, or as otherwise determined solely by AT&T. Based on your creditworthiness, a non-refundable fee may be required to establish service and we may require you to enroll, and remain enrolled, in an automatic payment or electronic funds transfer plan. We may establish additional limits and restrict service or features as we deem appropriate. If your account balance goes beyond the limit we set for you, we may immediately interrupt or suspend service until your balance is brought below the limit. Any charges you incur in excess of your limit become immediately due.

Many customers learn about the fee only after receiving their first bill, which usually arrives after the contract grace period deadline offered to customers who change their mind and exit the contract penalty-free.

“I recently ordered new service and I was told ‘Congratulations you don’t require a deposit,'” wrote ‘Susanja.’ “That’s great, right? Not! I just opened my first bill and there’s a $500 credit management fee for a total of $600+ for my first month’s bill.”

By the time the first bill arrived, she was already locked into a contract with a substantial cancellation penalty.

WTTE-TV in Columbus investigates AT&T’s “Credit Management Fee.” (3:29)

After months of negotiations, it all came down to a matter of control.

Softbank Group Corp., owner of Sprint Corp., has abandoned a long-expected merger between Sprint and Deutsche Telekom’s T-Mobile USA, citing concerns about which company would have effective control of the combined wireless carrier.

At the 11th hour, Softbank’s board of directors in Japan expressed concern the merger would leave Deutsche Telekom with majority control of Sprint’s assets and network, leaving Softbank effectively out of the U.S. market at a time when companies like Sprint and T-Mobile are preparing for the future launch of 5G wireless networks that will likely be a backbone for the future multi-billion dollar Internet of Things (IoT) marketplace. Multiple sources have told both Japanese and American newspapers that SoftBank’s founder and CEO Masayoshi Son had always been reluctant to give up control of Sprint, but had not made the issue a potential deal breaker until the talks were nearly complete and final decisions had to be made.

Deutsche Telekom considered the issue practically non-negotiable, because the international telecommunications company has relied heavily on the financial performance of T-Mobile USA to brighten its financial reports. Deutsche Telekom subsidiaries in Europe have struggled financially as a result of competition and other factors and international accounting rules require DT to have control of assets it wishes to include in its financial reports. Had T-Mobile ceded control of the merged company to Softbank, it could not include its U.S. business in its financial reports.

T-Mobile USA is regarded as the stronger of the two companies, and its German parent is very happy with its U.S. subsidiary. Most analysts argue Sprint needs the merger with T-Mobile far more than T-Mobile needs Sprint, so there was reportedly little disappointment from Deutsche Telekom over the merger talks achieving an impasse. To calm nervous investors, Softbank plans to announce it will step up its investment in Sprint to improve its network and coverage. Sprint customers have heard such promises before, but the fourth largest wireless carrier has continued to lose market share, mostly to the benefit of T-Mobile. Independent tests have shown Sprint’s network often performs worse than its three major competitors in many areas.

Hoitenga

In what must be a new speed record, Michigan’s Republican state Representative Michele Hoitenga introduced and then effectively pulled support for her bill that would have banned community broadband initiatives across the state.

Introduced Oct. 12, the bill succinctly banned any use of public funds to construct a municipal internet alternative to the phone and cable companies. The bill came under immediate criticism for its content and accuracy, erroneously transposing speeds of a “qualified internet service” as one offering at least 10Mbps upload speed and 1Mbps download speed.

In an effort to keep things ‘organized,’ Charter Communications is ‘normalizing’ rates in its acquired service areas to match amounts paid by legacy Charter Communications customers for years. Charter will not lose any money from this process, effectively “rounding up” the rates it charges, causing bill shock for some former customers of Bright House Networks enrolled in grandfathered and/or promotional pricing plans.

Harry Johnson, who has been a Bright House customer in Florida for over 20 years, was unpleasantly surprised when he was notified in a letter his rates were going up approximately $20 a month.

“Charter wrote me telling me my promotion was expiring and they were raising my rates, except I am not on a promotion and have been paying the same price for internet service for a few years now,” Johnson tells Stop the Cap! “It was either the longest promotion ever or Charter was lying.”

Johnson was paying around $45 for his Bright House internet plan. Effective this month, he is being asked to pay $65 — a $20 increase.

“After they refused to negotiate or give me even a semblance of an explanation that made sense, I told them they just lost a multi-decade customer,” Johnson said, signing up for Frontier FiOS instead. “It is amazing to me just how nonsensical these giant cable companies are sending letters like that and then be non-responsive to complaining customers, hoping we will just swallow it.”

In a letter sent by Charter to a subscriber in Texas, signed by Sam Araji, Charter’s vice president of billing, the cable company explains the customer was enrolled in promotion that was now ending and billing would continue at standard rates.

(Courtesy: ‘etaadmin’)

A DSL Reports reader encountered almost the same situation when he discovered his internet bill was $20 higher than the month before.

“I found this curious because I wasn’t on any promotional offering and just have internet only service,” wrote ‘Chuch.’ “When I called customer service, I was told that I was under an old Bright House plan and that Spectrum was adjusting pricing to be more ‘in-line’ with their national plans and that she wasn’t going to budge on the price, even though I was never under a promotion. All I got from her was lip service about how I should be paying more for the same service I’ve had for some time, even though there have been no service improvements over that time.”

Like Johnson, ‘Chuch’ is dropping his Charter Spectrum service and switching to Frontier FiOS.

Former Bright House customers in Florida have been hit twice with rate hikes, first in March when some customers saw their bills literally double. Charter admitted it would raise rates for the majority of customers $20-30 a month this year alone.

WFTS in Tampa reported some customers in the Tampa area saw their bills double after Charter/Spectrum took over from Bright House. (3:21)

President Donald Trump promised voters during last summer’s Republican National Convention that he would ‘not look the other way’ and ignore Washington politicians that have “sold out to some corporate lobbyist for cash.”

But newly released documents show that while Mr. Trump was delivering his remarks, top Republican officials and some of the nation’s biggest corporate lobbyists were enjoying a plush, corporate funded private hideaway where politicians could safely meet with corporate interests away from the public’s glare.

The Center for Public Integrity could not directly obtain information about the “cloakroom” — the informal name designated by the GOP for the space designed to look like a cross between an elite hotel lobby, a private club, and expensive office space — because the organizers sought to keep it a secret. But an unrelated lawsuit filed in a Ohio court made public important bank records which revealed just how much some of America’s top corporations were willing to quietly spend to keep the Republicans happy.

The top donor was Comcast Corp., which contributed $200,000. Microsoft, the Koch Brothers, and AT&T each donated $100,000. Those companies were joined by large banks, the oil, gas, and pharmaceutical industries, and curiously an $80,000 check from the Morongo Band of Mission Indians, among the top political donors in California. The group has spent more than a quarter-billion dollars on campaign contributions and lobbying to convince lawmakers to allow the Native Americans the right to spread slot machines around the state.

To keep the contributions a secret, Republicans created a limited liability corporation — “Friends of the House 2016 LLC,” according to bank records. This group was not obligated to disclose its funding sources, and fought hard in court to keep the names of its corporate donors from being revealed to the public.

Corporate interests were nervous about sponsoring the 2016 Republican convention that was widely expected to choose Mr. Trump as the Republican candidate. Corporate interests told the New York Times last year they were under pressure to scale back their contributions as the campaign grew divisive. AT&T told the newspaper it was limiting its contributions to convention activity “aimed at benefiting the democratic process.” The company had no comment about how their contribution to fund an exclusive, strictly off-limits to the public-“cloakroom” accomplished that.

Instead of foregoing contributions, the Republicans devised a way to quietly obtain corporate money while giving donors cover from public scrutiny.

“The immediate effect is it looks like it hid certain donors to the convention,” said Lawrence Noble, senior director and general counsel for the Campaign Legal Center, a nonpartisan nonprofit that advocates for campaign finance reform.

One of the designated perks of being a donor to the ‘Friends of the House’ was a free pass to enjoy the facilities for refreshment and relaxation.

“As a sponsor of the hospitality venue, we were invited to use it, as well,” said Jori Fine, a spokeswoman for Health Care Service Corp. The company paid Friends of the House 2016 LLC $100,000, according to bank records, a payment that Fine said “supported hospitality and other events during the 2016 GOP Convention in Cleveland.”

Should a donor’s lobbyist or corporate executive bump into top Republican lawmakers inside, such as House Speaker Paul Ryan, who was given his own private space in the “cloakroom,” that was ‘purely coincidental.’ Since donor companies were given access while non-donors were not, lawmakers using the “cloakroom” could easily deduce donors by the presence of their lobbyists or company officials.

Most of the companies who made contributions are still trying to keep it a secret. In addition to an effort to get a Ohio judge to seal the records before they were made public, 15 of the 20 donor companies refused to confirm they were donors and had no comment or did not respond when asked about it.

Marketing materials from the company that constructed the “cloakroom” give the public their only view of its elegance. Members of the public were not allowed inside.

“The convention is one big loophole to the limits of corrupting money on politics,” Paul S. Ryan, vice president for policy and litigation at Common Cause, a nonpartisan nonprofit that advocates for limits on money in politics told the Center. He is not related to House Speaker Paul Ryan.

The Center for Public Integrity also exposed how companies and individuals like the Koch Brothers claimed they were staying away from contributing to the GOP convention, while eagerly feeding secret contributions to the LLC that benefited it:

Friends of the House 2016 LLC appears to have provided companies an especially discreet opportunity to support the GOP convention.

For several of the companies that didn’t otherwise donate cash directly to the Cleveland 2016 Host Committee — a list that includes 12 of the entities listed in the bank records — there was little or no public evidence of their use of corporate dollars to support of the 2016 Republican convention.

For example, Comcast Corp., which wrote a $200,000 check to Friends of the House 2016 LLC, isn’t listed as a donor by the Cleveland 2016 Host Committee.

Neither is Koch Companies Public Sector, which wrote a $100,000 check to Friends of the House 2016 LLC. In fact, a Koch Industries spokesman in June said the billionaire brothers Charles and David Koch, well-known Republican megadonors, weren’t planning to contribute to the convention at all.

Neither firm responded to a request for comment about the payments to Friends of the House 2016 LLC.

The majestic space created for politicians and corporate interests to relax together in a familiar “cloakroom” setting was no small undertaking, according to Joe Mineo Creative, the company that transformed the Cleveland Cavaliers’ practice basketball court inside the Quicken Loans Arena in Cleveland into something that would fit comfortably in a high-end D.C. hotel or private offices for corporate executives. It was with some embarrassment to the Republicans that the company that did the work was sufficiently proud of it to boast about it in marketing materials, giving the public its only glimpse of how more than $1 million in corporate contributions was spent during the three-day convention. When it was over, the “cloakroom” was torn down to restore the basketball court.

It isn’t known if any campaign finance laws were broken as a result of these contributions.