AT&T to pay $7.75M for allowing phone bill 'cramming'

Posted:
in General Discussion edited August 2016
The Federal Communications Commission on Monday announced AT&T will pay $7.75 million in fines and refunds for allowing scammers to operate a "cramming" scheme that saddled thousands of customers with charges for a fraudulent directory service.




According to a statement from the FCC's Enforcement Bureau (PDF link), the Drug Enforcement Agency uncovered the scam perpetrated by Cleveland area companies Discount Directory, Inc. (DDI) and Enhanced Telecommunications Services (ETS), both of which were each under investigation for drug crimes and money laundering.

DDI and ETS set up a cramming scheme that would bill thousands of AT&T customers, mostly small businesses, for a monthly directory assistance service that did not exist. AT&T profited on the sham setup by receiving a fee from DDI and ETS for each billing placed on a customer's bill. As with many cramming scams, customers did not sign up for DDI and ETS services, nor did they approve monthly billings from the sham entities.

In its settlement, AT&T will pay refunds expected to total $6.8 million, as well as a $950,000 fine to the U.S. Treasury. Further, the FCC's Enforcement Bureau has required AT&T cease billing for nearly all third-party products and services on wireline bills as the company adopts new safeguards against fraudulent third-party billings. Under the settlement terms, AT&T must obtain express informed consent from consumers before initiating third-party charges, revise its monthly bill to clearly identify said charges and offer a free service for customers to block unwanted third-party services.

Today's cramming settlement is AT&T's second, the first being a 2014 payout of $105 million in fines and refunds to wireless subscribers over unauthorized third-party subscriptions and premium text messaging services. AT&T is not the only provider accused of cramming, however.Last year, Sprint and Verizon paid out a combined $158 million to settle similar billing practices.

Comments

  • Reply 1 of 10
    lmagoolmagoo Posts: 49member
    AT&T...the worlds largest virus!
    lordjohnwhorfinfrankielostkiwidysamorialatifbp
  • Reply 2 of 10
    $7.75M is a tiny slap in the wrist for big business (speaking as an employee of a large IT vendor).
    pscooter63lordjohnwhorfinfrankielostkiwidysamorialatifbp
  • Reply 3 of 10
    It's like 10 cents per person
    jbdragonlatifbp
  • Reply 4 of 10
    frankiefrankie Posts: 378member
    Well that's good.  Not like they wanted them to learn a lesson or anything.  

    What did att make on this 7.75 million a day?  Freaking joke and no surprise.
    lostkiwidysamoria
  • Reply 5 of 10
    SlyflySlyfly Posts: 2member
    Congratulations, AT&T enters the 21st century.
  • Reply 6 of 10
    lostkiwilostkiwi Posts: 633member
    But, but if we let the carriers self regulate everything will be so efficient and transparent.

    We don't need the FCC sticking its big government nose in things. Let's cut its funding.
    Oh wait. 


    edited August 2016 dysamorialondornolamacguylatifbp
  • Reply 7 of 10
    dysamoriadysamoria Posts: 3,429member
    lostkiwi said:
    But, but if we let the carriers self regulate everything will be so efficient and transparent.

    We don't need the FCC sticking its big government nose in things. Let's cut its funding.
    Oh wait. 


    Thank you. I'm glad to see I'm not the only one.   This is EXACTLY the problem with laissez faire capitalism. Actually, I'm surprised at the number of people commenting about how the fines are too little. Usually it's a libertarian orgy in here.
    londornolamacguybadmonk
  • Reply 8 of 10
    Obviously, the earlier $105 million wasn't enough to get ATT's attention.
    latifbp
  • Reply 9 of 10
    linkmanlinkman Posts: 1,014member
    Obviously, the earlier $105 million wasn't enough to get ATT's attention.
    If that's the case then an another $7.75 million won't even come across Randall Stephenson's desk.
  • Reply 10 of 10
    badmonkbadmonk Posts: 992member
    the fine is off by an order of magnitude (or two).  despicable.  this is yet another example of how Wall Street over values services over the sale of a tangible product, it reminds them of how they act, ie money for nothing.
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