AT&T Class Action: Prepaid Phone Plan Is a Bait and Switch

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A new class action lawsuit claims that a prepaid phone plan offered by AT&T is actually a bait and switch scam.

Plaintiff Eric Zatt of California alleges AT&T has been falsely offering a 10 cents per minute prepaid service plan in conjunction with the retail purchase of certain mobile phones.

Zatt claims the plan is offered in AT&T’s packaging for certain phones compatible with the company’s GoPhone prepaid service. These GoPhones are sold for anywhere between $20 to over $100 at retail locations like Best Buy, Wal-Mart and Rite Aid.

Zatt says that after buying a GoPhone, the customer must activate the phone and choose an AT&T service plan. His AT&T class action lawsuit includes photographs of the promotional packaging from a GoPhone, which offers a few different plans. One of these plans offers a rate of 10 cents per minute for all nationwide calls.

According to Zatt, that 10 cents per minute plan does not exist. When a customer activates their phone and tries to accept that plan, Zatt claims they find out that plan is not available.

By the time the purchaser knows the 10 cent per minute plan is not really an option, Zatt says they’re forced to choose between accepting a significantly more expensive plan or be left with an otherwise useless phone.

The plaintiff alleges that in May 2016 he bought an AT&T Z432 GoPhone for $29.99 and a $10 “refill and go” card to use with the phone. However, when he tried to activate the phone, Zatt says he discovered the 10 cents per minute plan he had expected to use was unavailable. He claims he was offered a 25 cents per minute plan instead.

Zatt argues this allegedly false offer constitutes a bait and switch scam. His AT&T class action lawsuit raises claims of fraud, negligent misrepresentation, unjust enrichment, and violations of California state consumer protection laws.

According to the AT&T class action lawsuit, the company is one of the largest providers of prepaid cell phone service in the U.S. Zatt says AT&T currently has about 11 million prepaid customers.

The plaintiff seeks to represent a nationwide Class of all persons who bought an AT&T GoPhone and were subject to the promotional materials advertising a 10 cents per minute plan. He also proposes a subclass that would consist of those Class Members who reside in California.

Zatt is asking the court for an award of damages and a full refund to everyone who purchased a GoPhone packaged with an offer of a 10 cents per minute plan. He also seeks a court order requiring AT&T to cease the sale of GoPhones with the allegedly misleading packaging and to offer all users of AT&T GoPhones a chance to purchase the 10 cents per minute plan that was advertised.

The plaintiff’s attorney is Stephen R. Basser of Barrack, Rodos & Bacine.

The AT&T Prepaid Phone Bait and Switch Class Action Lawsuit is Eric Zatt v. AT&T Corp. and AT&T Mobility LLC, Case No. 3:16-cv-01323, in the U.S. District Court for the Southern District of California.

UPDATE: On July 25, 2016, AT&T said that instead of bringing a class action lawsuit, Zatt must arbitrate his claim that AT&T ran a bait-and-switch scam with some of its prepaid phones and services.

UPDATE 2: On Sept. 9, 2016, Zatt opposed the prepaid cell phone provider’s motion to compel arbitration, stating that because he never activated his GoPhone, he never agreed to arbitrate his claim.