AT&T Penalized $7.75 Million For Allowing Scammers To Charge Bogus “Directory Assistance Service” Fees

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Nearly two years after AT&T was hit with a $105 million settlement over bill-cramming — the practice of letting third parties place questionable or false charges on customers’ phone bills — the Federal Communications Commission says the company has agreed to pay another $7.5 million to close the book on additional cramming accusations involving a bogus directory assistance service.

According to the FCC’s Enforcement Bureau, this latest cramming scam was uncovered in May 2015 by, of all agencies, the Drug Enforcement Administration.

The DEA was looking into businesses connected to suspects in a case involving drugs and money laundering when it learned that two of these companies — Discount Directory, Inc., and Enhanced Telecommunications Services — were sham corporations set up for the sole purpose of cramming $9/month “directory assistance service” charges onto AT&T landline bills — mostly for small business accounts.

Just like in other cramming instances, the FCC says AT&T failed to ask these companies for proof that the phone customers had actually signed up for these services. And, just like in the other instances of cramming, AT&T kept a piece of each bogus $9 charge it collected.

The FCC says that AT&T also “ignored a number of red flags that the charges were unauthorized, including thousands of charges submitted by the Companies for nonexistent, disconnected, or otherwise ‘unbillable’ accounts.”

As part of the settlement agreement [PDF], AT&T will refund all the bogus fees it collected on behalf of the two companies, around $6.8 million. It will also pay a civil penalty of $950,000 and cease billing for most third-party services on landlines.

“A phone bill should not be a tool for drug traffickers, money launderers, and other unscrupulous third parties to fleece American consumers,” said Enforcement Bureau Chief Travis LeBlanc. “Today’s settlement ensures that AT&T customers who were charged for this sham service will get their money back and that all AT&T consumers will enjoy greater protections against unauthorized charges on their phone bills in the future.”

In a statement emailed to Consumerist, AT&T notes that it ceased collecting these particular fees in June 2015.

“Consistent with industry practices, AT&T wireline telephone customers have been able to purchase certain telecommunications services from third parties and have charges for those services billed on their telephone bill,” reads the statement. “We have implemented strict requirements on third parties submitting charges for AT&T bills to ensure that all charges are authorized by our customers; indeed, those requirements go beyond the requirements of FCC rules and impose safeguards that the FCC proposed but never adopted. Nonetheless, unbeknownst to us, two companies that engaged in a sophisticated fraud scheme were apparently able to circumvent those protections and submit unauthorized third-party charges that were billed by AT&T.”

AT&T says that affected former and current customers will receive their refunds via check within 90 days.

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