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DOJ Sues AT&T for Not Taking Action Against Nigerian Scam

DOJ Sues AT&T for Not Taking Action Against Nigerian Scam
March 23, 2012 1:27PM

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Rob Enderle, principal analyst at the Enderle Group, said the DOJ lawsuit against AT&T showcases a changing attitude by the federal government when it comes to fraud. More than ever before, he said, carriers like AT&T are in a unique place to see and prevent fraud -- but often they seem to sit back and take a piece of the action.

Neustar, Inc. (NYSE: NSR) is a trusted, neutral provider of real-time information and analysis to the Internet, telecommunications, information services, financial services, retail, media and advertising sectors. Neustar applies its advanced, secure technologies in location, identification, and evaluation to help its customers promote and protect their businesses. More information is available at www.neustar.biz.

The U.S. Department of Justice is accusing AT&T of fraud. The DOJ alleges that the telecom giant knew Nigerian scammers, among others, were using a calling service it offered to deaf customers in a plot to rob American merchants.

The DOJ filed suit under the False Claims Act, saying AT&T improperly billed the Federal Communications Commission for reimbursement and received more than $16 million from the FCC to offer the IP Relay services to deaf and hearing-impaired consumers.

"Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States," said Stuart Delery, acting assistant attorney general for the Civil Division of the DOJ. "We will pursue those who seek to gain by knowingly allowing others to abuse this program."

AT&T Maintains Innocence

The DOJ 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 the 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.

"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."

The U.S. complaint was filed in a lawsuit originally brought under the whistleblower provisions of the False Claims Act by Constance Lyttle, a former communications assistant who worked in one of AT&T's IP Relay call centers.

"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," said Marty Richter, a spokesman for AT&T.

Making an Example of AT&T?

Rob Enderle, principal analyst at the Enderle Group, believes the lawsuit showcases a changing attitude by the federal government when it comes to fraud. More than ever before, he said, carriers are in a unique place to see and prevent fraud -- but often they seem to sit back and take a piece of the action.

"With this move the U.S. government is effectively saying 'enough' and suggesting that these firms need to proactively address the fraudulent behavior when they become aware of it," Enderle said. He expects this suit will be followed by moves that hold the carriers to a high standard of discovery.

"Overall this shows a trend to shared responsibility for law enforcement and user protection. The government realizes it doesn't have the resources to do it alone, particularly if U.S. companies are complacent. The Department of Justice is putting a price on complacency that they hope will eliminate that behavior," Enderle said.

"It is a shame that AT&T and other firms didn't feel it necessary to be proactive in eliminating a known criminal behavior, and this serves as a reminder that the cost of not being proactive can be very high."

Tell Us What You Think
Comment:

Name:

Carol Ann:

Posted: 2012-03-25 @ 3:56pm PT
I find it appalling that this is going on, the complacency associated with it and my rights to privacy are being ignored. Perhaps this is how my account was invaded.



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