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AT&T Pays Another $3.5 Million to Settle IP Relay Fraud Claims
by Karl Bode 04:43PM Thursday Nov 07 2013
Since 2004 or so we've been covering the fraudulent abuse of IP Relay services, which are intended to help the hearing impaired communicate with phone users via the Internet. In 2008 the FCC finally passed rules requiring that carriers had to register users and at least try to verify their addresses as genuine, something carriers tended to resist since the fraud -- mostly Nigerian credit card scams -- has been incredibly profitable for them.

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In 2012 AT&T was sued by the Department of Justice, who claimed the telco was intentionally doing nothing to stop the fraud in order to continue profiting from it. Back in May of this year, AT&T agreed to settle with the DOJ to the tune of $18.25 million, even though as we noted at the time this probably didn't even begin to cover the money AT&T made off of lax fraud prevention.

Today, the Department of Justice announced AT&T would be paying another $3.5 million to resolve civil allegations under the federal False Claims Act. AT&T tells Bloomberg News the company still denies any wrongdoing, while downplaying the scope of the fraud:
quote:
Marty Richter, a spokesman for AT&T, said in an e-mailed message that although the company denies the allegations, it decided the “most productive course” was to settle the suit. Richter said the case involved "an exceptionally small line of business that we no longer offer."
When you consider estimates that 95% of AT&T's IP Relay call volume was fraudulent and AT&T made $1.50 per minute for more than a decade, "exceptionally small" isn't quite the phrase that comes to mind.

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Skippy25

join:2000-09-13
Hazelwood, MO

I am curious

Why is it then when business makes money like this the fines are not $x based on how much they were able to calculate they made x's 2 or 3 as a penalty?

There is absolutely no reason in any case that the fine they pay should not be what is calculated to be the gain + a large penalty for doing to it to begin with.

In addition, any executive that was knowingly involved should be prosecuted and be required to pay a % of the total fine as well.

Mike
Premium,Mod
join:2000-09-17
Pittsburgh, PA
kudos:1

1 recommendation

Re: I am curious

Because when ex and future employees of these said companies write the laws and are appointed to regulatory commissions then there is very little incentive to actually punish.

Justice? Yeah right. Just us.
--
"If something about the human body disgusts you, complain to the manufacturer" - Lenny Bruce
What this country needs is a good five dollar plasma weapon.

dvd536
as Mr. Pink as they come
Premium
join:2001-04-27
Phoenix, AZ
kudos:4
the amount of the fine is a moot point since it winds back up as an increased or new below the line fee on your bill!
--
Despises any post with strings.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: I am curious

Agreed as companies don't pay, it is always the customers. This argument has been made by many which is why I also included the prosecution and fining of the people involved in it. That alone could cause major falls in their stock as well as the market and consumer confidence.

Fine the company and let that some of the negativity take place right then. In addition, some markets are actually price sensitive so raising prices can still greatly cost them.
tlbepson
Premium
join:2002-02-09
Washington, DC
Reviews:
·Comcast

1 edit

.

Since AT&T received $10million from the CIA for call data, the additional $3.5million AT&T will be paying is hardly a drop in the bucket against AT&T's profits.

AT&T also dipped their toes into the captioned phone scene--I signed up as a beta tester for the system but could never get logged in to their system--and that went nowhere as they terminated the project shortly after it went live.

I use a CapTel phone and I am very grateful the service exists even with the recent extremely annoying FCC changes. Prior to these FCC changes, when I hung up the handset on my CapTel phone, the "Caption" button remained On so that when I picked up the handset to make or received a call, I was automatically connected to the captioning center. Now, "Caption" button is turned off when I hang up the handset and if I forget to turn it on prior to picking up the handset, my call is not captioned--very frustrating when I answering an incoming call because I can't understand what is being said.

The FCC is rightly concerned about scammers but their approach is heavy-handed for those of us who rely on the captioned telephone system to make phones accessible. CaptionCall (similar to CapTel but with its own phone design) recently sent users a sticker to put on the CaptionCall phone. The sticker states "Federal law prohibits anyone but registered users with hearing loss from using the device with captions on".

I actually could see this sticker possibly being somewhat useful if the phone were in a public setting but it's ridiculous to force individual owners of a captioned telephone to put the sticker on their home phone--the letter from CaptionCall stated "All customers are required to place a label on their captioned telephone" (emphasis mine) and there is even a diagram showing where to place the label.

meeeeeeeeee

join:2003-07-13
Newburgh, NY

Re: .

said by tlbepson:

I actually could see this sticker possibly being somewhat useful if the phone were in a public setting but it's ridiculous to force individual owners of a captioned telephone to put the sticker on their home phone--the letter from CaptionCall stated "All customers are required to place a label on their captioned telephone" (emphasis mine) and there is even a diagram showing where to place the label.

Sadly you can bet that if you were caught not obeying this foolish requirement that the penalty you would pay (as a percentage of your total income) would be CONSIDERABLY HIGHER than AT&T paid compared to the money they stole from taxpayers. Ain't Amerika wonderful?
--
"when the people have suffered many abuses under the control of a totalitarian leader, they not only have the right but the duty to overthrow that government." - The U.S. Declaration of Independence
tlbepson
Premium
join:2002-02-09
Washington, DC
Reviews:
·Comcast

.

>>meee...: Sadly you can bet that if you were caught not obeying this foolish requirement that the penalty you would pay (as a percentage of your total income) would be CONSIDERABLY HIGHER than AT&T paid compared to the money they stole from taxpayers.

Indeed...'-}}

While I own a CaptionCall phone, I have never gotten around to installing it and use my CapTel phone. Interestingly, CapTel has not sent any sort of FCC-required label. This might be due to the differences between how CapTel was established as compared to CaptionCall.

While CaptionCall was basically immediatelly available across all states, CapTel had a much slower rollout--it's been in existence much longer than CaptionCall--in that CapTel was approved (or not) by each state individually going through some sort of state-level approval process. This allowed CapTel, for example, to offer the saving of the text of a captioned call essentially indefinitely (saved until the text scrolled off/out of the "saved call" buffer by new text) because CapTel had worked with each state to overcome any issues with "taping" of calls where CaptionCall's call-text was deleted after first viewing because each state had different "taping" regulations and CaptionCall took the quicker lowest common denominator approach.

My guess is that while CapTel was required by the FCC to mod the phone software to turn off the "remember last setting" for the "Caption" button (in effect, handset hangup = turn off), CapTel was in already in compliance with other FCC regulations so that the label was not required.

Probitas

@teksavvy.com

Crime actually does pay in America

Punishment for this would be to recoup all money made and then levy a steep fine, but I'm sure the government realized that would be biting off their future job prospects. Can't offend them, they could hire us to lobby in the future. Quite the scam there.

n2jtx

join:2001-01-13
Glen Head, NY

Re: Crime actually does pay in America

Crime does indeed pay when you are the one writing the laws!
--
I support the right to keep and arm bears.
old_wiz_60

join:2005-06-03
Bedford, MA
Reviews:
·Verizon FiOS
American businesses don't worry about fines as long as they are making money. If they take in 75 million and have to pay 10 million in fines, they are way ahead of the game. Bribing Congress or government agencies such as the FCC and DOJ plus the courts (including SCOTUS) is considered ethical and acceptable these days.

Probitas

@teksavvy.com

what about the victims?

Maybe the actual victims should class action AT&T and sock it to them. It's not like they aren't guilty. Then they can argue for willful misconduct and hit them with damages. Same with the rest of them that were in bed to all intents and purposes with criminals.