Since around 2004 we'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. 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 are 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. Finally saying enough was enough, the Department of Justice today announced they were filing a lawsuit against AT&T for bilking taxpayers out of millions of dollars by abusing IP Relay subsidies. According to the complaint, the DOJ says AT&T intentionally implemented an authentication system they knew wouldn't work so they could keep raking in the cash:AT&T has issued a statement to the press claiming they adhered to the rules, and that it's not their fault that the rules aren't very good or that Nigerian scammers are pretending to be disabled. 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.

While AT&T operates the lion's share of these services, Sprint and others have also played a role -- their exclusion from the suit 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 to realize that just maybe somebody should stop throwing slush fund money at giant carriers.