U.S. accuses AT&T of making millions off IP Relay scammers

Complaint alleges willful failure to stop abuse of system that helps hearing impaired


The federal government today issued a complaint against AT&T that essentially accuses the telecom giant of bilking U.S. customers out of millions of dollars by knowingly and willfully failing to effectively address rampant abuse of a system designed to help the hearing impaired.

AT&T's response: We can't fix what we can't fix.

From a Department of Justice press release:

IP Relay is a text-based communications service designed to allow hearing-impaired individuals to place telephone calls to hearing persons by typing messages over the Internet that are relayed by communications assistants (CAs) employed by an IP Relay provider.   IP Relay is funded by fees assessed by telecommunications providers to telephone customers, and is provided at no cost to IP Relay users.   The FCC, through the TRS Fund, reimburses IP Relay providers at a rate of approximately $1.30 per minute.   In an effort to reduce the abuse of IP Relay by foreign scammers using the system to defraud American merchants with stolen credit cards and by other means, the FCC in 2009 required providers to verify the accuracy of each registered user's name and mailing address. 

The United States alleges that AT&T violated the False Claims Act by facilitating and seeking federal payment for IP Relay calls by international callers who were ineligible for the service and sought to use it for fraudulent purposes.   The complaint alleges that, out of fears that fraudulent call volume would drop after the registration deadline, AT&T knowingly adopted a non-compliant registration system that did not verify whether the user was located within the United States.   The complaint further contends that AT&T continued to employ this system even with the knowledge that it facilitated use of IP Relay by fraudulent foreign callers, which accounted for up to 95 percent of AT&T's call volume.   The government's complaint alleges that AT&T improperly billed the TRS Fund for reimbursement of these calls and received millions of dollars in federal payments as a result.

AT&T issued  statement that appears to say, "What do you want from us?" according to Bloomberg:

Marty Richter, a spokesman for Dallas-based AT&T, said in a statement that the company followed the FCC's rules for providing Internet Protocol Relay services and for seeking reimbursement for those services.

"As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an e-mail account, but FCC rules require that we complete all calls by customers who identify themselves as disabled," Richter said.

I have no idea  whether this kind of fraud is something a service provider could stop or not. But it's clear the government believes that AT&T's response would be a whole lot different and more effective had it been losing millions instead of gaining millions.

Welcome regulars and passersby. Here are a few more recent buzzblog items. And, if you’d like to receive Buzzblog via e-mail newsletter, here’s where to sign up. You can follow me on Twitter here and on Google+ here.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2012 IDG Communications, Inc.