AT&T Online Payment Practices Result In Undisclosed Banking Fees For Debit Card Users

During the last two months I have been trying to find out why I am being charged erroneous ATM fees by my bank. Last month my statement showed a “foreign ATM transaction fee,” which normally would result if I had withdrawn money using an ATM that was not owned by my bank. When I insisted that I had only withdrawn funds from ATM’s owned by my bank, they researched the fee and told me it was levied when I used my debit card to pay my AT&T cell phone bill online. Even though my bank graciously agreed to refund the fee, I was determined to make sure it didn’t happen again. I logged in to my online account with AT&T and read over all their policies regarding the fees they charge for various payment methods. Of the online payment options, their website states:

We accept the following forms of payment:
* ATM debit cards – STAR, Pulse, ACCEL, NYCE
* Credit/debit cards – Visa, MasterCard, American Express, Discover Network, Diners Club

There is no other distinction made between credit and debit cards and no notice that any fees will be levied if a debit card is used. I assumed it was a one-time mistake.

This month I again used my debit card to pay my AT&T cell phone bill online. Two days later, the monthly phone bill showed up on my bank statement, along with yet another “foreign ATM transaction fee.” This time I called AT&T. Since the customer service rep that I reached was unable to answer my question, she accelerated my issue to the supervisory level and then became the go-between in the resulting conversation: I asked a question of the rep, she repeated my question to the supervisor, he provided an answer to her, and she then relayed that answer to me. I never did find out why I couldn’t talk directly to “Supervisor Crawford,” who insisted that AT&T does not charge a fee for the use of a debit cards and went so far as to say that my bank way lying to me. So sure of his position was Crawford that, through the customer service rep, he suggested I have the bank fax him written proof that AT&T had charged a fee for use of a debit card to pay the bill.

Realizing by now that I was in one of those situations where everyone is pointing the finger at the other party, I was determined to get to the bottom of this issue. Again my personal banker told me that the charge was the result of withdrawing cash from an ATM machine outside of my banking system. Again I insisted I had not used any ATM’s other than those owned my my bank. And again, my banker refunded the fee. When she did so, the bank’s software confirmed that it had been the result of the AT&T payment. In my frustration, I asked how AT&T could get away with charging such a fee without disclosing it to the customers. My banker explained that AT&T was not charging the fee – that my bank was charging the fee because AT&T was putting the fee through as an ATM transaction. Indeed, when I revisited my bank statement online, I noticed that AT&T’s line item said “HONOR Withdrawal – AT&T ATM QA TAMP.”

By now, even my personal banker’s curiosity had been piqued; she was puzzled as to why AT&T would be putting through the payment as an ATM transaction. What would be the benefit to them? Suddenly, she knew the answer. “It’s because the merchant services are less on a debit card than a credit card.” When customers pay with a credit card, the merchant is charged a fee, usually in the range of 1.5-3% of the purchase amount. Putting it through as an ATM transaction ensures that the banking system will see it as a debit card rather than a credit card, and debit card transactions carry much lower fees for merchants. Unfortunately, when the payment is processed in this manner, the bank sees it as a “foreign ATM transaction,” which results in a $2 fee being charged to my account.

So, while “Supervisor Crawford” was technically correct when he said that AT&T was not charging me an online payment fee, I am incurring a monthly banking fee as a direct result of AT&T’s processing practices. AT&T makes no disclosure of this practice and in effect, denies any responsibility for the charge. At the very least, in my opinion, this is unethical. It may well be illegal. And although I am not a litigious person, I can’t help but wonder if this is the stuff of which class-action lawsuits are made.


19 thoughts on “AT&T Online Payment Practices Result In Undisclosed Banking Fees For Debit Card Users”

  1. Thanks!
    I was just setting up auto-pay for my phone bill and there was a checkbox, something like: Allow AT&T to us STAR, PULSE, etc…
    I had no idea what they were talking about, and of course the default was set to checked.
    But I just read your article and it saved me from being screwed by AT&T even more than normal.


  2. Thanks for the great write-up. This was very helpful and like others saved me a lot of stress and anger. I dont mind paying for over priced cellular phone service, but to pinch us out of a few extra dollars is wrong.

  3. thank you for posting this – I had this sneaky suspicion the checkbox with the option for another (besides visa) institution to handle each transaction had to be worth looking into. A quick google search sent me here – and saved me $ and aggravation! THANKS!

  4. CAL? The new option when paying your bill is to uncheck the box that makes it an ATM fee. This makes it a Visa charge for AT&T  and more expensive for them, saving you the money. If they give you the option, then caveat emptor. I googled the statement before I submitted and found this article. then I unchecked the box and cannot participate in your CAL.

  5. Barbara,
    I just made my payment online to AT&T, and I don’t know if this option was there when you made your first payment, but- there is now a checked box option under your first addition of a new “credit/debit card” as method of payment that says:

    “Debit transactions may be processed via the STAR, Pulse, ACCEL, or NYCE networks. Please uncheck this checkbox if you do not want your transaction processed via the STAR, Pulse, ACCEL, or NYCE networks so your transaction can be routed through the Visa or MasterCard network, as appropriate.”

    If you uncheck it, my understanding is that it wouldn’t charge the ATM fee.

    • Thanks Susana, I’ll check that out. I still think that, without a clear disclosure that a fee can be charged, AT&T is not acting responsibly.

  6. There is a massive change underway in the mobile media market as it becomes unshackled from the operators’ portals that have dominated it for a decade, all without having made any significant inroads into the content use of mobile users. The new capped data packages, fuelled by further competition, will see a total revamp of the mobile media market. It will no longer be based on portals but on direct services by content and services providers via open source phones and mobile-friendly Internet-based services. The next step is the continued emergence of m-commerce and in particular m-payment services.

  7. Barb — did you ever find out more about this practice? We’d be curious to know if you ever received a more satisfactory response from AT&T or any of your readers.
    .-= GetDebit´s last blog ..Community Gift Card Programs Launched =-.

    • Hi GetDebit:
      No, I never heard back from AT&T. I even sent the info along to the NY Times and a couple other large papers, but nothing ever came of it. I converted to paying by entering the routing and account numbers of my checking account, rather than using the debit card, as suggested by one of the other commenters.

  8. AT&T Universal Card charged a”foreign transaction Fee’ for a purchase that was made in the USA, in US dollars. Initially AT&T customer service told me that it was British Airways who made the charge, then when I told them I had already spoken to BA who denied making the charge, , the AT&T rep. admitted they had levied the charge because BA was a foreign company. Similarly AT&T also made the extra charge on our Skype paypal account even though it too was a dollar charge.

  9. Hi Barb: The other day, there was a report on I Think CNN that banks were charging certain fees in order to make up for their losses from home loans — I am not sure if this falls into that category but you might want to send the info to a tv station’s investigative reporter to see. I think that most people do not check their statements closely — thus AT&T or banks feel they can get away with this scam! It should be just like processing a check when you use your debit card or so it seems to me.

  10. Barb, is your debit card tied to your checking account? If so, couldn’t you just pay online directly from this account (using account and routing numbers) as opposed to the debit card?


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