Uncle Sam Says AT&T Fleeced Fund for Deaf

(CN) - AT&T took millions of dollars from a fund providing telephone services to the hard-of-hearing, even though it knew most of its users were using the service fraudulently, the Department of Justice says.

Internet protocol relay services, known as IP-relay, allow users with hearing difficulty to type words that are then relayed by an operator employed by the service provider to people on the other end of the call.

The FCC provides the service for free to users and reimburses service providers $1.30 per minute out of a fund raised by telephone fees.

Concerned about use of the service by foreign scammers using stolen credit card information, the FCC required providers in 2009 to verify the accuracy of each registered user's name and mailing address.

Whistle-blower Constance Little filed the original complaint under seal in 2010. On March 21, the docket updated with the government's intervenor complaint and a 63-page amended complaint. The False Claims Act case says AT&T intentionally adopted a registration system that did not verify that users were located in the United States because it anticipated a drop-off in call volume. It did so even though the FCC had informed AT&T that 95 percent its calls were fraudulent, according to the complaint.

An FCC spokesperson said the agency "welcomes the Department of Justice's filing, which arises from an investigation that the commission's Office of Inspector General actively assisted."

"Fraudulent IP Relay practices are a serious problem the commission has been addressing, and the commission's enforcement bureau also has ongoing investigations of IP Relay practices," the spokesperson said.

Earlier this month the FCC asked the public to "refresh" its record on the misuse of IP Relay so that it can develop more effective regulations to combat fraud.

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