FCC Demands AT&T Refund $7 Million in Unauthorized Charges by Scammers

[MacRumors]

The FCC's enforcement bureau announced today it has reached a settlement with AT&T that will see the carrier pay $7.75 million for allowing scammers to charge thousands of customers approximately $9 per month for a sham directory assistance service.

AT&T has agreed to issue full refunds to all current and former customers who received unauthorized third-party charges from January 2012 onwards. The refunds are expected to total $6.8 million, while AT&T will also pay a $950,000 fine to the U.S. Treasury.

The scam was uncovered by the U.S. Drug Enforcement Administration while investigating two Cleveland-area companies Discount Directory, Inc. (DDI) and Enhanced Telecommunications Services (ETS) for drug-related crimes and money laundering. During the investigation, DEA officials discovered financial documents related to the scam that primarily targeted small businesses.

AT&T received a fee from the companies for each charge AT&T placed on its customers' bills. Although DDI and ETS submitted charges for thousands of AT&T customers, they never provided any directory assistance service. Neither DDI, ETS, nor AT&T could show that any of AT&T's customers agreed to be billed for the sham directory assistance service. Phone companies like AT&T have a responsibility to ensure third-party charges are legitimate and were approved by the consumer.

AT&T is required to cease billing for nearly all third-party products and services on its wireless bills, and can only reinstate charges of that kind with express informed consent from customers. The carrier also must revise its billing practices to ensure that third-party charges are clearly identified on bills, and offer a free service for customers to block third-party charges.

In 2014, AT&T similarly agreed to pay $105 million in fines and refunds for unauthorized third-party subscriptions and premium text messaging services. T-Mobile also reached a $90 million settlement with the FTC, which accused the carrier of "cramming" unauthorized SMS subscriptions like horoscopes on bills. The FCC has taken more than 30 enforcement actions against carriers for related cases since 2011.

Article Link: FCC Demands AT&T Refund $7 Million in Unauthorized Charges by Scammers

 

[ravenstar]

Must be money to be made. Apparently these penalties aren't high enough. You'd think they'd have learned from Citibank.

 

[Barry Bishop]

Which will be passed on to us

 

[Z400Racer37]

while AT&T will also pay a $950,000 fine to the U.S. Treasury.

Lol, because #OurCut

 

[Derekuda]

ATT really is a POS company. Wish they would go out of business along with Verizon. #SprintFTW

 

[rjohnstone]

Another reason to check your bill every month.
I spotted one of these a couple of years back and was able to have it removed and got a full refund for the charges.
I was able to get a permanent block on all third party services for all my lines.

 

[Attirex]

Steve Jobs wouldn't have done this?

Or...time for Tim Cook to go?

 

[rdlink]

Lol, because #OurCut

It's not free to investigate and prosecute wrongdoing. Seems only fitting that the entity committing the infraction pay for that, and not the taxpayers in general.

 

[2457282]

I wonder how much my rate will go up to cover these costs

Although I am happy to hear that the Sham was discovered and stopped, the reality is that this penalty is so low that it become the cost of doing business. Does not really affect ATT as they simply will pass the cost on to the consumer. Same for T-Mobile.

 

[thekeyring]

AT&T is doomed! No wait, they're not doing well enough for people to predict that.

 

[drumcat]

Well, there does one of the useless Superbowl ads this year...

 

[blacktape242]

Which will be passed on to us

don't you hate that! i wish companies were not allowed to do that.

 

[iapplelove]

Looks like my unlimited data is going to go up another 5 bucks..

 

[Tech198]

Even though u would be paying a "third party" for horocopes, it *should* be itemised on your bill because your using AT&T to get it..

It's like saying, "I'm accessing Netflix, so all ISP's are required to implement unmetered data."

 

[blacktape242]

It's not free to investigate and prosecute wrongdoing. Seems only fitting that the entity committing the infraction pay for that, and not the taxpayers in general.

but don't the tax payers pay for that anyways? where is #mycut ?

 

[Tech198]

Big gaps in weather it makes "sense" to do certain things on certain services.. for no valid reason what-so-ever to back it up with the motive "because we can"

 

[Chair-Sama]

Steve Jobs wouldn't have done this?

Or...time for Tim Cook to go?

because jobs and cook were behind this one right? haha

 

[konqerror]

"unauthorized third-party charges on its customers’ wireline telephone bills"

This has nothing to do with wireless or Apple, so I don't know why we care about it here. Wireline is run pretty much independently due to differences in state and federal regulation.

I believe part of the problem is by default, AT&T has to allow charges on customer's phone bills from whoever, such as long distance services and 900 numbers, because the wireline people are a monopoly and aren't allowed to pick what competing service is allowed.

 

[ricktat]

I wonder what I will spend my $2.56 refund on.... maybe a ringtone

 

[ksnell]

Lol, because #OurCut

Wonder if there is some sort of build up to that fine. AKA, we spent this much on payroll, etc to determine what you did, so please now pay us back.

In any regard, its less tax money spent by the government but the expense will undoubtably be passed on to the AT&T customers.

 

[Chair-Sama]

but don't the tax payers pay for that anyways? where is #mycut ?

basically what it is, is that ~950k was taken out of the budget(paid by the taxpayers) to investigate this.
they are now putting it back into the budget.
think of a saving account, you take out 500$ to pay for something, you get 500$ back, you put the money back. to put it simply.

 

[rjohnstone]

don't you hate that! i wish companies were not allowed to do that.

Your comment makes no sense.
Where do you think AT&T gets their money from?
Their customers will pay for it regardless. Be it via a rate increase or a reduction in service, the customer always pays.

 

[ksnell]

but don't the tax payers pay for that anyways? where is #mycut ?

Hopefully it'll help subsidize their budget so they will save money, but we all know they will just spend more instead.

 

[konqerror]

Their customers will pay for it regardless. Be it via a rate increase or a reduction in service, the customer always pays.

Nope. That's not how investor-owned utility regulation works. State PUCs define what are allowable costs (like putting up cables) and a return on investment of those costs. Fines are not an allowable cost, so that money must be paid out of the profit allowed, reducing the net profit/dividend to the investors.

 

[rjohnstone]

"unauthorized third-party charges on its customers’ wireline telephone bills"

This has nothing to do with wireless or Apple, so I don't know why we care about it here. Wireline is run pretty much independently due to differences in state and federal regulation.

I believe part of the problem is by default, AT&T has to allow charges on customer's phone bills from whoever, such as long distance services and 900 numbers, because the wireline people are a monopoly and aren't allowed to pick what competing service is allowed.

Yep... looks like whomever wrote the article did a poor job reading the source article.
This particular settlement is regarding land line services (wireline).
The previous $105 Million settlement was for wireless.