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

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

Posted by Soulskill on Friday March 23, 2012 @05:01AM 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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FYI by tripleevenfall · 2012-03-23 05:03 · Score: 2

It's treble, not triple.
1. Re:FYI by Anonymous Coward · 2012-03-23 05:04 · Score: 5, Informative
  
  Treble damages is a legal term meaning triple damages.
  Yes, lawyers make up their own words/phrases for stuff to confuse you.
2. Re:FYI by BiggerBadderBen · 2012-03-23 05:06 · Score: 3, Insightful
  
  They mean the same thing, trebleevenfall. Don't be a pedantic tool.
3. Re:FYI by Richard_at_work · 2012-03-23 05:08 · Score: 5, Informative
  
  Lawyers didn't make it up, it's a well used word here in the UK. It's just fallen out of use in US English.
4. Re:FYI by Frosty+Piss · 2012-03-23 06:13 · Score: 4, Informative
  
  As any fisherman knows, a treble hook is a three-pronged hook.
  
  --
  If you want news from today, you have to come back tomorrow.
5. Re:FYI by Rasperin · 2012-03-23 06:16 · Score: 2
  
  If a tree falls in the woods, does it make noise? If a word falls out of a language, does anyone notice? These are the great mysteries of the world!
  
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  WTF Slashdot, why do I have to login 50 times to post?
6. Re:FYI by tripleevenfall · 2012-03-23 06:43 · Score: 2
  
  they see me trollin
  they hatin
Let me guess.... by Brannoncyll · 2012-03-23 05:11 · Score: 5, Insightful

.. the only ones getting hurt by the fines will AT&T's customers when they see their bills increase.
1. Re:Let me guess.... by cpu6502 · 2012-03-23 05:16 · Score: 3, Insightful
  
  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.
  
  --
  My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
2. Re:Let me guess.... by cpu6502 · 2012-03-23 05:22 · Score: 5, Informative
  
  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?
  
  --
  My AC stalker: " I personally agree with your posts most of the time, but that won't keep me from modding you troll"
3. Re:Let me guess.... by Anubis+IV · 2012-03-23 05:45 · Score: 5, Informative
  
  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.
4. Re:Let me guess.... by Brannoncyll · 2012-03-23 05:51 · Score: 3, Insightful
  
  omg! don't hold corporations accountable!
  get a grip.
  Hold the management responsible. Fining the corporation will just result in pissing off their customers but will not discourage the corporation from doing it again unless they lose a significant number of customers.
5. Re:Let me guess.... by Brannoncyll · 2012-03-23 05:59 · Score: 4, Interesting
  
  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, 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.
Consumers will foot the bil for AT&T by VinylRecords · 2012-03-23 05:11 · Score: 3, Insightful

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.
1. Re:Consumers will foot the bil for AT&T by Lunix+Nutcase · 2012-03-23 05:13 · Score: 2, Insightful
  
  So your solution is to never punish businesses instead?
2. Re:Consumers will foot the bil for AT&T by Marc_Hawke · 2012-03-23 05:20 · Score: 4, Interesting
  
  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.
  
  --
  --Welcome to the Realm of the Hawke--
3. Re:Consumers will foot the bil for AT&T by yoghurt · 2012-03-23 05:31 · Score: 2
  
  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.
  
  --
  Yoghurt
4. Re:Consumers will foot the bil for AT&T by msobkow · 2012-03-23 05:34 · Score: 5, Insightful
  
  The bosses should get punishment.
  Exactly. You can't put a corporation in jail, but you can put the law-breaking decision makers there.
  Incorporation protects the board of directors and management from financial losses and seizure of their personal assets. It does not protect them from prosecution for illegal activities or decisions made on behalf of the company.
  
  --
  I do not fail; I succeed at finding out what does not work.
5. Re:Consumers will foot the bil for AT&T by Hognoxious · 2012-03-23 06:11 · Score: 2
  
  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.
  
  --
  Confucius say, "Find worm in apple - bad. Find half a worm - worse."
6. Re:Consumers will foot the bil for AT&T by dkleinsc · 2012-03-23 06:12 · Score: 2
  
  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 prices by as much as they think they can get away with without reducing volume (say $5 per month), with the remainder turning into reduced profits.
  Another way of thinking about it: A corporation can be modeled as an equation in which money comes in from buyers paying an aggregate cost of p for the product, and goes out to government (g), suppliers (s), workers (w), management (m), and investors (i), so that p = g+s+w+m+i. If some other cost c is imposed (from any source), you're making the incorrect assumption that the equation can only be balanced by p+c = g+s+w+m+i+c, when it in fact can be balanced by n*b = g+s+w+m+(i-c)+c or numerous other ways.
  
  --
  I am officially gone from /. Long live http://www.soylentnews.com/
7. Re:Consumers will foot the bil for AT&T by sjames · 2012-03-23 06:22 · Score: 2
  
  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.
8. Re:Consumers will foot the bil for AT&T by Anonymous Coward · 2012-03-23 07:10 · Score: 2, Interesting
  
  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.
I was getting these calls in 2002 by rickb928 · 2012-03-23 05:13 · Score: 5, Interesting

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.

--
deleting the extra space after periods so i can stay relevant, yeah.
1. Re:I was getting these calls in 2002 by MickyTheIdiot · 2012-03-23 05:37 · Score: 2
  
  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.
Believable for AT&T by Sponge+Bath · 2012-03-23 05:15 · Score: 4, Informative

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.
Re:hucksters. by tripleevenfall · 2012-03-23 05:15 · Score: 4, Funny

As a huckster, I don't appreciate you slandering my name like that.
at&t is no better by sdnoob · 2012-03-23 05:23 · Score: 2

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.
Re:friendly heads up RE "hearing impaired" by Anonymous Coward · 2012-03-23 05:25 · Score: 3, Insightful

It's the euphemism treadmill. People come up with a euphemism to describe a negative condition without the negative connotations associated with the original word. Unfortunately, the reason why the word had negative connotations in the first place is because the condition it described was undesirable. So the euphemism picks up the negative connotations that it was specifically created to avoid, and a new euphemism is necessary. The process then repeats. You can see this in a number of places. My favorite is how "idiot" turned to "imbecile" which turned to "slow" which turned to "retarded" which turned to "learning impaired" or "minimally exceptional" or whatever it is now.
The great 20th century philosopher and orator George Carlin had a pretty good routine about this; I'm sure you can find it on YouTube or something.
Re:friendly heads up RE "hearing impaired" by hawguy · 2012-03-23 05:27 · Score: 3, Informative

and i'm "hearing impaired" i hate it when people do stupid shit like this to be more "politically correct"
I dated a girl once that was deaf in one ear. She preferred to call it "deaf in one ear".
Left out a key part there in the summary. by JustAnotherIdiot · 2012-03-23 05:28 · Score: 3, Insightful

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.

--
What do I know, I'm just an idiot, right?
Put CEOs in JAIL by tekrat · 2012-03-23 05:29 · Score: 4, Interesting

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%

--
If telephones are outlawed, then only outlaws will have telephones.
Re:friendly heads up RE "hearing impaired" by CubicleZombie · 2012-03-23 05:32 · Score: 5, Funny

"Hearing impaired" is not the preferred phrase
Yeah, it should be HEARING IMPAIRED!!!!!

--
:wq
Cost to merchants high as well by beernutmark · 2012-03-23 05:32 · Score: 5, Funny

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.
No it hasn't... by fallen1 · 2012-03-23 05:43 · Score: 3, Funny

"Some voices got treble, some voices got bass
We've got the kind of voices that are in your face!"
-- Beastie Boys
See? Not out of use at all... Oh, wait, we're talking about treble/triple though aren't we?

--
Dream as if you'll live forever.
Live as if you'll die tomorrow.
~Anonymous~
Re:friendly heads up RE "hearing impaired" by courteaudotbiz · 2012-03-23 05:54 · Score: 3, Funny

WHAT???
I also got those on my cellphone by billstewart · 2012-03-23 06:05 · Score: 2

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 unlikely time to sell my company whatever scam he was pushing.

--

Bill Stewart
New Fast-Compression-only CPR http://preview.tinyurl.com/dy575ks
Re:hucksters. by PenquinCoder · 2012-03-23 06:30 · Score: 4, Funny

The Prince of Nigeria has just passed away and as heir to his throne and lawyers you will be able to sue this evil monster out of existence. All it takes is your name, SSN, address, and a good will payment of $10,000 USD forwarded to the address below using Western Union.

Mr. Johns Cammer
101 Prince Rd
JOS 930283
No-Scam State
Nigeria
Fake. The spelling is too good.
Re:hucksters. by tripleevenfall · 2012-03-23 06:44 · Score: 2

I agree, plus the mixed case is a dead giveaway.
Re:Fault by Fieryphoenix · 2012-03-24 01:48 · Score: 2

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.