AT&T Mobility will become the first wireless carrier nationwide to monitor claims made in online advertising for mobile phone content after a settlement with Florida's top law enforcement officer.

The company, formerly known as Cingular Wireless LLC, was also told to fully refund Florida consumers who were unknowingly billed for supposedly free mobile content. The deal was reached with the Florida Attorney General Bill McCollum's CyberFraud Task Force to create a new model for the advertising and billing of mobile phone content.

"This settlement is intended to send a clear message that Florida Attorney General Bill McCollum intends to clean up the industry of Internet advertising for cell phone content," said Sandi Copes, press secretary to the Attorney General in Tallahassee, FL.

"We're starting at the top and working our way down to ensure that consumers throughout the nation are protected and are receiving full and fair disclosure for whatever content is being advertised online," she said.

AT&T Mobility will pay $2.5 million to the Attorney General's Office to fund the efforts of the task force as it presses for similar reform nationwide. The company will also pay an extra $500,000 toward consumer education on safe Internet use.

The deal will let customers seek refunds even if they are no longer AT&T or Cingular customers.

The Attorney General's CyberFraud Task Force started an investigation after receiving complaints that thousands of Florida AT&T Mobility customers had gotten charges on their mobile phone bills for certain third-party services that they didn't authorize.

These charges often were for ringtones or other services that were advertised as free. But AT&T Mobility customers unwittingly ended up being signed up for costly monthly subscriptions for third-party content such as wallpaper, horoscopes and other mobile phone-related content.

The bill charges often appeared under such headlines as "Direct Bill Charges," "3rd Party Downloadable Content," "Premium SMS Messages," "Premium Text Messages," "M-Qube" and "M-blox."

The investigators found these third-party content offers typically targeted teens who often respond to these messages thinking the services are free. They download them to the phones, not knowing that their parents will be charged.

Such misleading practices are common in the wireless industry, according to the Attorney General's office, with carriers often receiving a cut of the charges paid by the customers.

Standard response
Per the terms of the agreement, AT&T Mobility will adopt and enforce strict standards for Internet advertising developed by the CyberFraud Task Force. The telecoms giant, via its contracts with content providers and advertisers, will require those firms to clearly and conspicuously disclose the true cost of ringtones and other content in all Internet advertising to prospects.

To wit: A "free" ringtone offer that results in a monthly subscription at a cost of $9.99 per month to the customer must state, "Free ringtone with paid monthly subscription of $9.99/month." These charges must be set out separately in the customer's AT&T Mobility monthly bill. This gives parents notice of any unauthorized charges so that they may cancel such subscriptions if they want to.

Also, AT&T Mobility will continue to offer parents the option of blocking downloaded content from their children's mobile phones. This service will be available free of charge if third-party charges have been billed without the parents' knowledge.

Mr. McCollum also said Friday that his office's CyberFraud Task Force will launch investigations into Verizon Wireless, Sprint Nextel, Alltel and T-Mobile to make sure that Floridians are protected from such charges without their knowledge.

Without doubt this deal has repercussions for carriers and online players.

"It sets a precedent and puts a stake in the ground for the mobile carriers and wireless companies themselves to share in the responsibility in how to properly advertise mobile content on the Web," said David Graff, general counsel and senior vice president of business development at online marketplace AzoogleAds.

"Other than ad networks and the carriers themselves, it really impacts online marketers who are playing by the rules and not committed to marketing mobile content responsibly," he said. "Get your act in order, or else."

Please click here for a copy of the settlement.

Please click here for examples of the misleading Internet ads.