FCC Enforcement Bureau, AT&T Reach $7.75 Million Cramming Settlement
AT&T agreed to pay $7.75 million to help settle an FCC cramming investigation into whether the company permitted unauthorized wireline phone bill charges, said an Enforcement Bureau release Monday. "AT&T allowed scammers to charge customers approximately $9 per month for…
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a sham directory assistance service. The scam was uncovered by the U.S. Drug Enforcement Administration (DEA) while investigating the scammers for drug-related crimes and money laundering." The bureau said the DEA probe targeted two Cleveland-area companies, Discount Directory and Enhanced Telecommunications Services, which, according to participants, billed AT&T landline customers for directory assistance they never provided. “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,” said bureau Chief Travis LeBlanc. AT&T will fully refund all current and former consumers affected by the cramming since January 2012 (expected to total $6.8 million), will pay the U.S. Treasury a $950,000 fine and institute further consumer protections, said the release. "Although it bore ultimate responsibility for the charges placed on its customers’ bills, AT&T never required proof from the Companies that they obtained customer authorizations to be billed for their service and the record shows that the Companies never obtained any such customer authorizations," said a bureau order and consent decree, which faulted AT&T for ignoring "a number of red flags that the charges were unauthorized." An AT&T spokesperson emailed a statement: “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. 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. Today, we reached a settlement with the FCC to resolve all claims associated with these companies and the related charges. ... We stopped billing for these entities as of June 2015 and will also cease wireline third-party billing for other third parties, with limited exceptions.” Affected AT&T customers will receive refund checks within 90 days, said the spokesperson.