AT&T Pays FCC $18.25 Million to Settle IP Relay Fraud Claims
Except Years of IP Relay Fraud Likely Netted Telco Much, Much More
Since around 2004
I've talked about the significant amount of fraud involved in the government's IP Relay service, which is intended to help the hearing impaired communicate with phone users via the Internet with the help of paid transcription workers (I remember talking with my grandfather over TRS versions of the service as a child). Unfortunately, for the better part of a decade the service has been abused by scammers and other assorted technoscumbags, with carriers doing nothing about it because they're paid by the FCC (aka you) about $1.50 per minute to carry this traffic.
Estimates at the peak of IP Relay's abuse suggested that anywhere between 80-90% of the traffic on IP-Relay networks is scammers using stolen credit cards to anonymously mail-order electronics in bulk. Carriers could have erected any number of simple authentication systems to recognize scammers and cut down on the fraud, but when you're being subsidized by the government at $1.50 a minute, why would you?
So in 2008 the FCC finally passed rules requiring that carriers register users and at least try
to verify their names and addresses. Four years later, the Department of Justice filed a lawsuit against AT&T
for failing to adhere to these standards while bilking taxpayers out of tens of millions of dollars by abusing IP Relay subsidies. According to the complaint, the DOJ accused AT&T of intentionally implementing an authentication system they knew wouldn't work so they could keep raking in the cash:
The 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 this 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. The government’s complaint alleges that AT&T improperly billed the TRS Fund for reimbursement of these calls and received millions of dollars in federal payments as a result.
AT&T issued a statement to the press at the time insisting it wasn't their fault that Nigerian scammers were abusing IP Relay, or that the FCC didn't implement good rules to stop it. When you consider that 95% of AT&T's IP Relay call volume was fraudulent, and AT&T was receiving $1.50 for every minute of every call made over the last decade, the numbers start to get absolutely staggering. The DOJ's claimed impact of millions of dollars may be a severe under-estimate. It's not out of the realm of possibility that we could be talking billions.
The steps taken today will not only ensure the integrity of the program, but also send a strong signal to providers that we will not tolerate abuse of the system.
-FCC, after more than a decade of IP Relay fraud and abuse.
AT&T has so far been unsuccessful at repeated attempts to have the DOJ's IP Relay lawsuit dismissed. Meanwhile, the FCC had been conducting its own investigation into AT&T's IP relay practices, and this week announced that AT&T has settled with the FCC to the tune of $18.25 million
. Like the DOJ, the FCC argued that AT&T intentionally did their best to skirt FCC rules so the fraud would continue and AT&T could continue raking in profits.
According to the FCC, AT&T has agreed to reimburse the TRS Fund $7 million plus interest, on top of paying $11.25 million to the United States Treasury. AT&T is also required to implement "a robust compliance plan" that includes "new operating procedures, comprehensive training of its employees and contractors, and periodic reporting requirements."
"The steps taken today will not only ensure the integrity of the program, but also send a strong signal to providers that we will not tolerate abuse of the system," said outgoing FCC boss Julius Genachowski in a statement.
Except not really. Again, AT&T has received $1.50 per minute government subsidies for more than a decade (Relay was invented in 1974, then converted in the early 2000s to use the Internet) during which billions of minutes of fraudulent IP Relay calls were placed. In other words, an $18 million fine is chump change compared to what AT&T has made off of IP Relay fraud. This from a company that likes to repeatedly complain that it's just too expensive to seriously upgrade more than half of their last-generation DSL users because they're just not profitable enough.
While AT&T operates the lion's share of these services, Sprint and others have also played a role -- their exclusion from the DOJ suit and FCC settlements suggests they did a better job adhering to the rule changes imposed by the FCC in 2008. Obviously there's plenty of government culpability here as well for running yet another program where it takes years for regulators tasked with consumer protection to stand up to a giant carrier and campaign contributor who is clearly committing and facilitating fraud.
Nothing like giving them what they deserve. A slap on the wrist is par for the course. Happy they didn't do anything substantial.
Pure speculation. Karl, when you have actual documents in hand that can specifically address these "billions" of minutes with an exact amount, then you are more than welcome to make those accusations. While I have no love lost for AT&T or any national carrier, your article (as more often than not) in this case is pure speculation and total sensationalism. Nothing more.
Re: Pure speculation. "Also, the article doesn't even mention that IP Relay has been used for prank calls for several decades."
I do not, have not, and will not work for AT&T/Comcast/Verizon/Charter or similar sized company.
Re: Pure speculation. How much of that "foreign" traffic was US prankers using intl VPN's
| |said by FFH5:Yeah, said by Mojo 77 :
Oh FFS. Only this website would have boobs come out defending AT&T for abusing a system used to help the elderly and hard of hearing.
IP Relay has been abused for decades. As the article notes, you should be able to do the math at $1.50 per minute subsidies with a decade or two of abuse, when 80-90% of all IP relay traffic is fraud. Do the math.
It isn't defending AT&T to question the amount of fraud minutes claimed by Karl. Until he can find stats showing how many IP Relay minutes were used and how much was fradulent, the total amount of loss is speculation.
I love stats to but I'm not such a blind nit wit that I can't see that no matter what the actual stats may be, we all know how true this is and the fact the FCC did absolutely nothing about it just proves that office needs to be eliminated! Just as AT&T and Verizon, just to mention a couple, need to be also!
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Re: Pure speculation.
The article simply speculates we could be talking billions, with $1.50 per minute and ten to fifteen years of abuse (not to mention prank calls). I think that's entirely within the realm of possibility and not "sensational." What's "sensational" is that it took ten to fifteen years for the government to do anything about it.
I completely agree that if/with no audit, than the fine is mostly a hollow victory. But let's be honest, without that audit saying "billions" it no more relevant than saying "tens". It only serves to make things potentially more sensational than they are.
It's very, very unlikely you'll see either the DOJ or FBI pursue an audit, based on historical cases like this. I bet if you did a real audit of any incumbent telco's coffers over the last thirty years, you'd find a hell of a lot worse than a billion in IP relay fraud.
prison for fraud Until the day that the executives of these corporations get put in prison for their obvious fraud, ripping off the people for billions of dollars is nothing but a misdemeanor(as shown by the tiny fine)
And that also goes for those people that bribe the government, along with those politicians who accept the bribes.
Lobbying = Bribery
West Henrietta, NY
Re: "(IP Relay was first established in 1974)" ??
said by josephf:And the Gov't rules weren't changed until 2008. If they had tried to limit access to the relay service before that, I wonder how much of a fine they would have faced.
TRS may have been established in 1974, but IP Relay (which the scammers use from overseas) is much more recent. IP Relay is the Internet version of TRS. Established after 2000.
$1.50 a min? Looks like its time to make an adjustment to the subsidy. It can cost the carrier more than a few pennies per min.
Re: $1.50 a min? I think they are paying a person to translate the message. I can see how it's expensive, though $0.50 per minute should be plenty. If it's done with computer voice, it should be much cheaper.
Re: $1.50 a min?
said by axus:The relay operator is always a human, never software. The service would be impossible to use if it was software due to accents, bad/noisy landline phone or bitrobbed mobiles, asking the RO if they reached a male or female on the other end, etc.
I think they are paying a person to translate the message. I can see how it's expensive, though $0.50 per minute should be plenty. If it's done with computer voice, it should be much cheaper.
Re: $1.50 a min? That make more sense. I figured it was a machine translation.
That slap on the wrist must sting.... ...perhaps half the 600mhz offering in the next wireless auction and a lollipop will make them feel better?