AT&T Is Paying $7.75 Million in Refunds and Fines Over Sham Calls (fortune.com)

AT&T will pay $7.75 million after a federal investigation found it allowed unauthorized third-party charges on its customers' telephone bills, the U.S. Federal Communications Commission said Monday, reports Reuters (via Fortune). From the report: The company allowed "scammers to charge customers approximately $9 per month for a sham directory assistance service," the FCC said Monday. The fraud was uncovered by the U.S. Drug Enforcement Administration while investigating two Ohio companies for drug-related crimes and money laundering, the FCC said. The settlement includes $6.8 million in refunds and a $950,000 federal fine, the FCC said. AT&T signed a consent decree with the FCC and agreed to cease billing for nearly all third-party products and services on landline bills and adopt procedures to obtain express consent from customers prior to allowing third-party charges. The company also agreed to revise its billing practices to ensure third-party charges are conspicuously identified on bills.

Comments

Only took em 30 years to get caught...

[Anonymous Coward]

...committing blatant & obvious fraud on a nationwide level.

The law never sleeps!

Tricks of the Mouth

[Tablizer]

We've had the experience whereby we order a new service or discount program. The AT&T "operator" starts talking fast and rattling off obscure names and words. When we ask for clarification, the operator just changes the subject, or says, "one second, let me check on something". Then a month and a half later, strange fees start showing up on our bill. After giving us the transfer run-around, we finally ask to have the fees removed. The "operator" says, "Sorry, they must have gotten there by accident".

I suspect these "operators" get a cut of any add-on service they sell, and thus have an incentive to stick you with a service using well-honed tricks of the mouth. In case the conversation is recorded, they have their "sloppy talk" as an excuse. In the end, it's "just a misunderstanding".

Why are all their "misunderstandings" in THEIR favor and not ours?

If there truly is a hell, these "operators" will roast crispy and crunchy (along with the managers who know about it and do nothing).

Re:Tricks of the Mouth

[TroII]

When we ask for clarification, the operator just changes the subject, or says, "one second, let me check on something". Then a month and a half later, strange fees start showing up on our bill.

One scam I've encountered before, and I'm not saying AT&T does this but other companies do, is they'll record your entire phone call. When they say "one second, let me check on something" and you reply with something like "that's fine," now they have a recording of you saying "that's fine." If you challenge the charges later on, they dig up the recorded phone call and someone spends a couple minutes stitching it together so it sounds like you said "that's fine" after they asked "Would you like to order $EXPENSIVE_SERVICE?"

I'm very leery of saying any affirmative phrases ("OK", "yes," "sure") over the phone unless I initiated the call or I know the other party.

~$8 million

[ausekilis]

For a company that makes billions each year. Guess rates are gonna go up a little bit to cover the fine and so the CEOs can pad their wallets for a job well done. After all, they took 5 minutes to fix a problem the gov found.

Sham legal justice

[swb]

If you and I did this through some business we owned, we would be charged with a dozen felonies. The prosecutor would have a field day over the fact that we obscured the nature of the charges to make it look like our legitimate business charges and did nothing to guarantee the charges were legitimate. Bottom line, we would go to jail.

AT&T? A fine so small that it is a rounding error on their SEC filings. And certainly not a hint of any criminal prosecution.

This is sham justice. AT&T should have been fined 10x the gross revenue they received from this little scam. The executives in charge of managing this scam should have been jailed for fraud, possibly even as co-conspirators in whatever drug investigation caused the DEA to find this operation.

They could have sent a message that said if you want to skim the cream with your billing operation, great, but make sure the billing is 100% legitimate or you will be held accountable for fraud.

Re:Sham legal justice

[amiga3D]

The only reason this got caught was because of a drug bust. I say it's really a money laundering scheme for drug kingpins. Isn't that life in prison?

What the hell

[rsilvergun]

I've got karma to burn, so I'll point out that this is the inevitable result of our misguide attacks on gov't and "Bureaucracy" (which work since we all hate the DMV). America never seems to cut down on the pork and waste going to the top but we do a fine job cutting back on enforcement. Then we all sit around /. and complain that AT&T made 20x profit on a piddly fine and that they'll do it again.

Whenever somebody tells you "Gov't's not the solution, it's the problem" check their credentials. They probably hail from a right wing think tank funded by a billionaire.

Re:What the hell

[swb]

The problem is that I don't think shady business practices are an enforcement priority, period. David Horowitz's "Fight Back" consumer TV show went on the air in 1976, and Consumer Reports has been publishing longer than that. 60 Minutes used to be famous for their on-camera ambush of fraudulent business before they became a talk show for the Geritol set.

American commerce is chock full of hucksters, scammers and flim-flam artists that get away with all kinds of shady practices that if pulled off by individuals would result in jail time, but as "business" they seem pretty immune from investigation let alone prosecution.

I could tell the cops my elderly neighbor sells Oxycontin and get more investigatory effort than is put forward towards the entire state's car dealers.

I sometimes wonder if hustling people (in effect, lying to them) is so ingrained in American culture that we really don't *want* strict enforcement of scams and fraud because at the end of the day we worry that our own frauds will be exposed and punished.

It's not the operator's fault

[rsilvergun]

they're working with what they have. It's easy as hell to blame the little guy, but shit runs down hill. Having worked in a few "real" call centers (the nasty sort) I can tell you that if you don't make your sales quota you get fired. Not for missing your quota (heaven forbid), but for any one of the dozens of minor infractions that exist. Doesn't help that the pay is so low it's either cheat on your sales or skip eating this week.

Re:Not if you set your corporations up right

[Tablizer]

worst case you close the LLC and open another one.

My dad knew a guy at church* who would open a furniture store, screw the customers, file bankruptcy, reopen a similar store under a relative's name, screw the customer, file bankruptcy, rinse, repeat until after 7 years where the original owner is no longer liable for the bankruptcy, and starts the cycle again.

Ever wonder why folks like Romney spend so much time in school? It's learning the difference between the letter of the law and the spirit.

If you can afford big lawyers, you get away with far more.

* All the scams and mayhem from church members always puzzled me. Lots of shit going on there. If they are true believers, they should realize they are going to hell. Are they so greedy or horny that they'll take pleasure now and rot for eternity because of it? Either the devil is real and tempting them, or deep down they believe the religion to be full of shit. Or maybe greed and sex are a reflex more powerful than the fear of baking 30 years from now. I've known women with seemingly hypnotic powers myself. I'm too geeky to draw their interest though (for good or bad). Humans are odd. Religion odder still.