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AT&T Communications Crime Government The Almighty Buck

AT&T Charged US Taxpayers $16 Million For Nigerian Fraud Calls 155

Posted by Soulskill
from the hand-in-the-cookie-jar dept.
McGruber writes "Bloomberg News is reporting that AT&T got more than $16 million from the U.S. government to run Telecommunications Relay Services, intended to help the hearing- and speech-impaired. However, as many as '95 percent of the calls in AT&T's hearing- impaired program were made by people outside the U.S. attempting to defraud merchants through the use of stolen credit cards, counterfeit checks and money orders.' According to the DoJ, 'AT&T in 2004, after getting complaints from merchants, determined the Internet Protocol addresses of 10 of the top 12 users of the service were abroad, primarily in Lagos, Nigeria.' The DOJ intervened in the whistle-blower lawsuit Lyttle v. AT&T Communications of Pennsylvania, 10-01376, U.S. District Court, Western District of Pennsylvania (Pittsburgh). The DOJ is seeking triple damages from AT&T."
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AT&T Charged US Taxpayers $16 Million For Nigerian Fraud Calls

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  • by tripleevenfall (1990004) on Friday March 23, 2012 @12:03PM (#39453123)

    It's treble, not triple.

  • Let me guess.... (Score:5, Insightful)

    by Brannoncyll (894648) on Friday March 23, 2012 @12:11PM (#39453231)
    .. the only ones getting hurt by the fines will AT&T's customers when they see their bills increase.
    • by cpu6502 (1960974) on Friday March 23, 2012 @12:16PM (#39453307)

      Don't be an ATT customer.

      I can't help wondering if this is really AT&T's fault? They were tasked to provide this service by the government. Were they then supposed to filter-out the overseas hearing-impaired? Doesn't that violate the Common Carrier requirement that phone calls not be monitored for content or restricted? (ponder). I'm curious to see how this turns-out.

      • Re:Let me guess.... (Score:5, Informative)

        by cpu6502 (1960974) on Friday March 23, 2012 @12:22PM (#39453369)

        Never mind. It appears AT&T didn't obey the rules:

        "In late 2008, the FCC required that providers certify that callers are eligible for the program by verifying the userâ(TM)s name and mailing address before issuing a 10-digit telephone number, according to the lawsuit. AT&T implemented a plan that mailed postcards to the addresses of users. Those who returned the card received a 10- digit number.

        "Between April 2009 and September 2009, AT&T had registered just 20 percent of its existing users. AT&T managers were concerned they would fall short of company projections for program minutes and related revenue, according to the lawsuit. "We are expecting a serious decline in [internet relay] traffic because fraud will go to zero (at least temporarily) and we havenâ(TM)t registered nearly enough customers to pick up the slack," Burt Bossi, a manager of AT&Tâ(TM)s technical team.

        Sounds like deliberate fraud to me.
        But then that is standard practive for
        government & government-paid contractors. :-|

        "The case is Lyttle v. AT&T Communications of Pennsylvania." Who is Lyttle and why is is being prosecuted in Pittsburgh?

        • Re:Let me guess.... (Score:5, Informative)

          by Anubis IV (1279820) on Friday March 23, 2012 @12:45PM (#39453723)

          The first name in a case is the person or entity bringing the case, so in this case it's Lyttle bringing a case against AT&T. As for who Lyttle is, from one of the articles:

          The United States’ complaint was filed in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act by Constance Lyttle, a former CA who worked in one of AT&T’s IP Relay call centers. Under the act’s qui tam provisions, a private citizen, known as a “relator,” can sue for fraud on behalf of the United States, which has the option of taking over the case.

          I.e. Lyttle is the person who noticed the fraud and decided to play whistleblower by suing AT&T. The DOJ has now chosen to step in. The article goes on to mention that if the DOJ is successful in the suit, Lyttle will get a cut of the recovery.

      • by hawguy (1600213)

        Don't be an ATT customer.

        I can't help wondering if this is really AT&T's fault? They were tasked to provide this service by the government. Were they then supposed to filter-out the overseas hearing-impaired? Doesn't that violate the Common Carrier requirement that phone calls not be monitored for content or restricted? (ponder). I'm curious to see how this turns-out.

        How can this not be AT&T's fault? They are the ones with the tools to detect and reduce this fraud. If a city pays a company to run a paratransit service, they shouldn't allow it to be used as a getaway car for a bank robbery, even if the passenger appears to be disabled.

        • by Zebai (979227)

          I used to work for a relay service that was a subsidy of Sprint. We had this problem too but there were issues involved that prevented alot of action on our part to stop these fraud calls. Relay's for the most part contracted by the state for a particular area and did not follow the monopoly areas. By contract we were required to be impartial on calls, even though our operators were accustomed to these calls and knew usually within the first 60 seconds if it was fraud or not we could not assume said pe

        • Relay services operate under FCC regulation and the Americans with Disabilities Act. FCC rules do not permit interference with calls, even calls involving illegal activity. This is because the phone calls of hearing impaired callers must be functionally equivalent to those of hearing telephone users. Hearing callers do not have operators on the line listening to their calls and disconnecting them if they do bad things, and so neither must hearing impaired calls have them. For the same reason calls are confi
      • by hairyfeet (841228)

        "Don't be an ATT customer."

        I'm sorry, have we met? Hi, this is the United States, land o' monopoly! In my area you want a cell there is AT&T and ...well that's it. if you drive 25 miles to the south you can use Verizon but who wants to drive 25 miles just to use their phone? Sadly here in the USA for those that are not from here we usually have ONE teleco and ONE cableco and that it is, there is NO choice and NO competition and the companies pay a shitload in bribes...err i mean "campaign contribution

    • omg! don't hold corporations accountable!

      get a grip.

    • So what do you suggest? Make corporations immune to fines and damages? Yes, their customers will have to pay off the judgement. IF they stay their customers. There is nothing stopping them from going to the competition (which will of course raise their prices, due to the sudden high demand).

      • Re:Let me guess.... (Score:5, Interesting)

        by Brannoncyll (894648) on Friday March 23, 2012 @12:59PM (#39453923)

        So what do you suggest? Make corporations immune to fines and damages? Yes, their customers will have to pay off the judgement. IF they stay their customers. There is nothing stopping them from going to the competition (which will of course raise their prices, due to the sudden high demand).

        According to this article [intomobile.com], in early 2011 AT&T had roughly 96 million customers. They can pay back a paltry $50 million dollar fine by increasing their customers monthly fee by 50 cents for one month.

        I suggest making the management responsible. Depending on the level of collusion (an investigation will need to take place) certain managers should be fined or even jailed. This would certainly discourage others from hiding behind the 'corporations are people' bullshit while committing crimes that citizens would be locked away for. Another alternative is making the fine so large that they could not afford to pass it on to their customers - of course this will likely take the company down anyway, but who cares? You do the crime, you do the time.

        • Wow... if regulatory capture wasn't a problem before, wait until we implement your suggestions.

        • If they could increase the fee without loosing too many customers, then they would have done it already.

        • by ExploHD (888637)
          With 5.93 billions shares, a $50 million dollar fine has an effect of 4/5ths of a cent per share. They can probably afford this since they're paying dividends of 44 cents per share per quarter this year.
        • by _0xd0ad (1974778)

          According to this article, in early 2011 AT&T had roughly 96 million customers. They can pay back a paltry $50 million dollar fine by increasing their customers monthly fee by 50 cents for one month.

          That probably wouldn't even pay for the DDoS of the support it would cause when a few million customers noticed the 50 cent increase and all tried to call AT&T at once.

  • by VinylRecords (1292374) on Friday March 23, 2012 @12:11PM (#39453235)

    I always laugh when a lawyer or judge or politician starts screaming about hitting a business with a financial loss to punish them for fraud or negligence or some other crime or scam. Where do they think that that money is going to come from? Do they think that the CEOs are going to pay it from their own pockets?

    That money will come directly from consumers and subscribers. Most who will be completely unaware of this lawsuit. AT&T will up the rates or charge extra for other services or products and that will pay off whatever losses are from this lawsuit.

    Basically only the consumers lose. The Nigerian scammers make their money. AT&T makes its money back eventually. The judges and lawyers make their money. And the consumers and taxpayers foot the bill for everything. It's a great system.

    • Re: (Score:3, Insightful)

      So your solution is to never punish businesses instead?

      • by Kenja (541830)
        For making bad choices? Yes.
        • Since when is "fraud" just a "bad choice"?

      • by Marc_Hawke (130338) on Friday March 23, 2012 @12:20PM (#39453345)

        Punish them by forcing discounts on customers. Instead of paying the money directly, they pay it in reduced revenues.

        Of course then there's no fees for the lawyers or fines for the government, so that'll never fly.

        • Then they'll just use that as an excuse to fire people. So in the end, every punishment is going to negatively effect someone. The solution is not no punishment at all.

        • Re: (Score:2, Interesting)

          by Anonymous Coward

          Force them to pay the damages in shares of stock. Then, as the government slowly sells them on the open market, it will reduce the stock price, the investors will notice, and get pissed off at the management. Then they may take action.

          This may not work, and there may be problems, but you want to get AT&T management to behave, getting the stockholders to notice is the only way I see to get the management to notice.

      • by s-whs (959229)

        So your solution is to never punish businesses instead?

        Money punishments are pointless most of the time. The bosses should get punishment. A substantial decrease in pay, and if things are bad enough throw them them in jail, forbid them to be part of boards of any companies etc. That's punishment that will work!

        Limited liability the way it works now gives 2 kinds of sociopaths a chance to wreak havoc: The actual sociopaths, and companies consisting of a-holes and sociopaths in the board and as directors

      • by Rich0 (548339)

        You don't punish businesses, because business are incapable of making bad decisions.

        You punish executives, because they are.

        Otherwise, anytime an executive makes a crooked decision and the business profits they take a big bonus, and anytime the business gets punished the shareholders take a loss. That is a recipe for the situation we're in now.

    • by joebok (457904)

      In this case, the business (wireless) is pretty competitive - so if AT&T decided to pass on the fine to their customers they face a real risk of losing those customers to a carrier that has not incurred the fines.

      Unless, of course, there is price collusion going on and all the carriers decide to jack up their rates simultaneously - but that is a different problem.

      AT&T benefited from a government contract - if they were negligent or didn't manage it well they deserve to face some kind of consequences

      • by reub2000 (705806)

        In this case, the business (wireless) is pretty competitive - so if AT&T decided to pass on the fine to their customers they face a real risk of losing those customers to a carrier that has not incurred the fines.

        This is the market where they charge $20/Month for 300MB of data, and another $20/Month for texting.

    • by yoghurt (2090)

      Dans ce pays-ci, il est bon de tuer de temps en temps un amiral^H^H^H^H^H^H CEO pour encourager les autres.

      • Dans ce pays-ci, il est bon de tuer de temps en temps un amiral^H^H^H^H^H^H CEO pour encourager les autres.

        Si seulement... Et donc d'améliorer le monde!

    • I always laugh when a lawyer or judge or politician starts screaming about hitting a business with a financial loss to punish them for fraud or negligence or some other crime or scam. [...] That money will come directly from consumers and subscribers.

      I always laugh when some uninformed twerp says that companies just pass fines on - without stopping to consider that if the market would bear a higher price they'd already be charging it.

      • by eldorel (828471)
        I always laugh when some sanctimonious prick decides to demean someone else for making a damned good point that he missed.

        Actually, no. I just get irked.


        Raising prices or adding an extra fee to a customers bill WHEN THE CUSTOMER IS LOCKED INTO A CONTRACT works because the changes are still cheaper than the cost of breaking contract.

        These companies don't add the fees to new contracts, they hit the locked in customers first.

        Additionally, a LOT of people in the US don't have multiple options for m
        • I also laugh at cunts who can't spell "bill".

          • by eldorel (828471)

            can't spell "bill".

            Who are you referring to?

            The word bill was only used twice in this sub-thread, and it was spelled correctly both times...

            Since I just woke up, I even double checked. [google.com]

        • by Kalriath (849904)

          Changing prices counts as a material change to the contract, which cannot be made unilaterally. The customer can then opt not to accept the new contract and void the agreement without incurring ETF penalties.

    • by dkleinsc (563838)

      That money will come directly from consumers and subscribers.

      That is in fact only half-true, and is identical to the situation for taxes and increased costs of doing business.

      The reason for this is the Law of Demand, which causes volume to go down when prices go up for the vast majority of goods. So, if this cost AT&T $20 per customer per month for a long time, a lot of AT&T users would switch to one of their competitors or be priced out of the market completely, and AT&T would lose too many customers. So what will happen is that AT&T will raise their

      • by eldorel (828471)
        DO you mind explaining where your final example equation managed to pull two new variables from?

        p+c = g+s+w+m+i+c

        Became

        n*b = g+s+w+m+(i-c)+c

        What are n and b supposed to represent?


        Additionally, even if we just examine (g+s+w+m+(i-c)+c)

        i-c looks like you're trying to say that the investors will eat the cost of the fine.

        What planet do you live on where the management is going to try and take the money from the investors (who have the power to complain directly) when there are a thousand or a mi
        • by dkleinsc (563838)

          Sorry, I had originally represented p=n*b, where n was the number of customers and b was the average amount they bought per person, and forgot to edit that out of the final one.

          i-c looks like you're trying to say that the investors will eat the cost of the fine.

          What I was saying is that investors could end up eating the cost of the fine. Remember, if you increase the price per person too much (b in the final equation), then the number of people buying your stuff drops. So, for instance, if you raise the price $1 per month on a million customers (+$1 million), but lose 20,000 people who chip

    • by sjames (1099)

      The idea is to hit them with a fine big enough that they can't pass it on and keep their customers. Alas, that's made meaningless by fines that can be paid out of petty cash and/or markets without adequate competition.

      Fines should be levied in terms of days of profit.

      • by eldorel (828471)
        And coupled with an injunction against raising prices on existing services for a minimum time period.
    • by nedlohs (1335013)

      Do you really think AT&T aren't charging what they think is the price that will generate them the maximu prodit already? You think out of the goodness of their hearts AT&T is making less money by charging a lower price?

      Obviously AT&T doesn't have perfect knowledge but I'm pretty sure they are trying to charge the amount to maximize profit. That means if they raise prices they'll make less money because less people will use the service (and if they lower prices they'll make less money too).

      Hence

    • by Jiro (131519)

      The fact that they committed the fraud to increase their revenue in the first place disproves this idea. By your reasoning they wouldn't need to commit fraud to earn money, get convicted, and pass the conviction fine on to the customer--they could just directly charge the customer the amount of money they wanted to earn.

      Any large company is going to be divided into a number of departments. The fact that one department's loss of money (from bringing government fines onto the company) can be compensated by

  • by rickb928 (945187) on Friday March 23, 2012 @12:13PM (#39453253) Homepage Journal

    Back then, it was the Sprint relay service. Callers would want to buy a dozen flat panel monitors, and offer a credit card and U.S. shipping address. Card was usually bogus, but sometimes not. We accepted a few orders but when the card would not approve we just dumped them - and callers would call back to order huge quantities of more expensive gear. We actually started refusing these calls from Sprint outright, got threatened with an ADA suit, and then magically they all stopped. I wonder if Sprint figured it out, or if the clan just moved on. Our defense against the ADA complaint was that we did not do business with foreign customers, no matter the shipping address. Part of this scam was to delay the shipments, dispute the charges, get refunded, and the merchandise is gone. Card goes bad, no one to complain to, and merchants usually have no recourse with the issuer or banks. You're just out the money AND the merchandise. We didn't happen to lose a dollar, but they probably managed to nick someone.

    Nice work though, AT&T being the disinterested third party for profit.

    Now can we start looking into how the Universal Service Find is being hijacked to try and build the rural Internet where no provider seems willing to do so as in some cases legally required? Noooo... but crony capitalism is flourishing, thanks to the few remaining taxpayers.

    Feh.

    • In the mid-90s I sometimes had to handle dial-up tech support through a relay.

      I felt sad for the operators. I had some where I had to give bad news to the caller that ended with the operator having to say something like "Fuck you." Again, adding anonymous to any conversation involves the "unified fuckwad theory."

      This is another reason phone based tech support is the worst job in the industry.

    • Yeah I also received these calls... for puppies. I kid you not we had a litter of Boston Terrier puppies for sale in the local paper and they would call through an interpreter wanting to buy the whole litter to be sent to somewhere in Texas to an alleged Petroleum Engineer. After a few calls I smelled something fishy and told them to take a hike... only to receive another hearing- and speech-impaired call with a different story a day later.

             

    • By now I don't remember what year it happened, but 2002 seems about right. I got a call from the internet deaf relay on a Sunday night on my work cellphone, with somebody who had a business proposition for me. I was in a noisy restaurant so I couldn't really hear the operator, and asked them to call back in the daytime; he called again the next evening. I don't think the guy really understood the concept of time zones, and he certainly didn't know that Memorial Day was a holiday and therefore a really un

    • Your responsibility under the ADA is to take the calls... not to take suspicious orders. If a hearing caller making the same order would be refused, then it's just fine to refuse the order from the relay caller... but you must provide the same service to a relay user as you would to a regular hearing caller.
      • by rickb928 (945187)

        I would have refused the call even if they had called us directly, we didn't do business overseas at the time. The threat came from Sprint, and was short - lived. They probably figured it out.

  • Believable for AT&T (Score:5, Informative)

    by Sponge Bath (413667) on Friday March 23, 2012 @12:15PM (#39453289)

    AT&T must have people dedicated to finding new ways to rip off customers. Just this month they retroactively increased my rates for the previous billing period. That period was consumed, billed and paid for. This month my bill goes up (an across the board $5/month increase for DSL), I look it over and see they credited part of the previous billing cycle at the old rate then charged it again at the new rate. I see no way it's legal to go into the past and charge more for services already rendered, billed and paid for.

    Probably most people did not pay enough attention to even realize what they did, and for the extra $3 it's not worth going to court. It's just another example of AT&T ripping off customers in a precise way to minimize the chances of getting called on their thievery.

    • [...]and for the extra $3 it's not worth going to court.

      IANAL, but if there are so many customers being ripped off that way, why not start a class action lawsuit? You could get more than this tiny 3$ for each consumer involved, and could put some public attention on the poor business practices of the company.

      However, not knowing a lot about the US market, maybe everyone already knows that, and many people continue to do business with AT&T...

      • IANAL, but if there are so many customers being ripped off that way, why not start a class action lawsuit? You could get more than this tiny 3$ for each consumer involved

        If other class action suits are a guide, the lawyers would get millions and each customer would get a $2 credit towards AT&T services.

        ...and many people continue to do business with AT&T...

        The only other choice in my neighborhood is Time Warner Cable. Both companies are in a never ending race to see which can provide worse service, charge the most outrageous fees and implement the most consumer hostile practices.

      • by sjames (1099)

        It's because most if not all providers pull the dirty tricks and all you ever get in a class action suit is coupons that require you to spend more money on the crooks to redeem them.

      • [...]and for the extra $3 it's not worth going to court.

        IANAL, but if there are so many customers being ripped off that way, why not start a class action lawsuit?

        The US Supreme Court has recently decided [mobiledia.com] that AT&T is legally allowed to put "You can't form a class action suit against us" in their license agreement. Now all the ISPs are rushing to add that clause to the mix. Even Netflix is joining in [dslreports.com] on the scramble.

  • on why nigerian fraud exists,
    https://en.wikipedia.org/wiki/Advance-fee_fraud [wikipedia.org]
    turns out once the free market is finished sucking a country dry, they really dont care much about the local economy. watching AT&T charge americans for fraud perpetrated as a result of another multinational corporations negligence is like watching Alaska charge rape victims for their kits, or prisoners for their incarceration.
  • by sdnoob (917382) on Friday March 23, 2012 @12:23PM (#39453379)

    than the crooks that abused the system to run their scams.

    at&t fixed the problem with postcard-based registration verification but when revenues when down (due to only legitimate users, which accounted for only 20% of them, getting access to the service) they went back to a free-for-all internet-based registration and then the problem with overseas abuse returned.

    of course they should pay.. and pay a hell of a lot more than 3 x 16 million for fraud...

    what i would have a problem with though is if the government expects (or requires) relay operators to monitor or log conversation content and act on that content.

  • by JustAnotherIdiot (1980292) on Friday March 23, 2012 @12:28PM (#39453449)
    Summary:

    $16 million from the U.S. government to run Telecommunications Relay Services, intended to help the hearing- and speech-impaired

    Article:

    $16 million from the U.S. government to offer a calling service for the deaf that the company knew was being used by Nigerian fraudsters

    There's a huge difference between these two statements. The first makes it sound like AT&T thought it was doing something good, but just so happened to be not so good.
    The second makes it sound like AT&T knew what it was doing, but did it anyway.

    Anyway, I'm usually not one to side with the DOJ, but I hope they kick AT&T's ass to the curb for this.

  • Put CEOs in JAIL (Score:5, Interesting)

    by tekrat (242117) on Friday March 23, 2012 @12:29PM (#39453471) Homepage Journal

    Make CEOs responsible for the actions of their companies. After all, if I defauded the government of 16million dollars you bet your ass I'd be in prison, but somehow AT&T gets only a fine?

    A fine that they will not even pay, since the money will actually come from their customers?

    The solution is to Jail the CEO.Just ask Mitt Romney, after all, he claims the corporations are people too.

    The CEOs should take responsibility, since it's the only way they can justify their outrageous salaries. It sure isn't because they've added value to the company. The S&P500 has been flat for a decade, but CEO compensation has gone up 400%.

    Disclaimer: I am the 99%

  • by beernutmark (1274132) on Friday March 23, 2012 @12:32PM (#39453503)
    We get a ton of these calls at our restaurant. It costs us time taken away from actual customers on the fear that we might actually get a real relay call someday. However, I can pretty much guarantee that it will never happen. The caller always asks for 50+ of the exact same item (never on our menu but generic enough to be on most restaurants menu). I wish we could class action sue AT&T for our business costs dealing with these fraudulent calls. FYI, we have found that the best way to shorten up the call is to ask how the weather is in Nigeria. Pretty much guarantees a disconnect.
  • It's amazing to me that this corporation keeps breaking the law, yet somehow manages to keep getting away with it. How many people will drop AT&T over this? or this? [wired.com], or this? [googleusercontent.com] Nobody.

  • by nurb432 (527695)

    How is it AT&T's fault people used their service fraudulently? That is like blaming the department of transpiration due to people running drugs in cars.

    • It isn't. What is their fault is choosing to deliberately sabotage their identity validation procedures with the express purpose of keeping call volume (and hence government reimbursement) high, while knowing that the increased traffic would be largely overseas scammers, which they represented themselves as properly blocking according the deal they made with the government that allows them to operate the service in the first place.
  • by alienzed (732782)
    $16 million for hearing and speech impaired telephone service? Am I missing something here?

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