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AT&T Agrees to $3.5 Million Settlement of Hearing Impaired Overbilling Scam; Fraudsters Made 95% of Calls

Phillip Dampier November 7, 2013 AT&T, Consumer News, Public Policy & Gov't, Wireless Broadband No Comments

att relayAT&T has agreed to pay an extra $3.5 million in addition to the $18.25 million already paid to settle Justice Department claims the company knowingly overbilled the government for reimbursement of fraudulent international relay calls usually made by scammers originating from countries like Nigeria.

The government joined a whistle-blower lawsuit in a Pittsburgh court in March 2012 after learning as many as 95 percent of relay service calls were initiated by ineligible individuals using a service intended for the hard of hearing.

AT&T was accused of knowingly allowing and profiting from fraudulent use of its relay service, collecting $1.30 a minute in reimbursement from a ratepayer-funded account administered by the government. The lawsuit claimed virtually all of the relay traffic was initiated by swindlers using untraceable text messaging.

Under the scam, an overseas individual pretending to be deaf would text message an AT&T relay operator to connect a call to a U.S. business or individual. Operators were compelled to relay any messages sent over the texting system, even if they suspected the calls were fraudulent. A large percentage of the calls originated in Nigeria and often involved placing orders with U.S. companies using stolen credit cards or counterfeit checks. Any subsequent investigation would reach a dead-end at one of AT&T’s relay operator centers, where the voice calls originated.

The federal government accused AT&T of profiting from the fraudulent calls and not suitably screening users to verify eligibility. The rules mandate individuals must certify they are deaf or hard of hearing and that they are United States residents. The federal government said AT&T skirted those requirements “out of fears that fraudulent call volume would drop after the registration deadline.”

“Taxpayers must not bear the cost of abuses of the Telecommunications Relay system,” said David J. Hickton, U.S. Attorney for the Western District of Pennsylvania. “Those who misuse funds intended to benefit the hearing- and speech-impaired must be held accountable.”

Today, the Justice Department announced AT&T agreed to pay another $3.5 million to resolve civil allegations under the federal False Claims Act.

AT&T said through a spokesperson settling the case was the “most productive course” of action.

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