AT&T has agreed to pay $7.75 million for letting scammers accused of running a drug ring bill consumers for fake directory assistance.
It received a fee from the scamming companies for each charge the telephone giant placed on its customers' bills, the Federal Communications Commission said Monday in an emailed news release. Although the companies submitted charges for thousands of AT&T customers, they never provided any directory assistance service, the agency said.
"A phone bill should not be a tool for drug traffickers, money launderers and other unscrupulous third parties to fleece American consumers," said Travis LeBlanc, chief of the FCC's enforcement bureau. "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."
Participants in the scheme told agents of the U.S. Drug Enforcement Administration that the companies were set up to bill consumers, mostly small businesses, for the non-existent service on their local AT&T landline telephone bills, the FCC said. The drug enforcement agency informed the FCC, and seized drugs, cars, jewelry, gold and computers, according to the news release.
AT&T will issue refunds to current and former consumers charged for the sham directory assistance service since January 2012, the FCC said. The refunds are expected to total $6.8 million, and AT&T also will pay a $950,000 fine, the agency said.
AT&T customers can buy services from third parties and have the charges appear on their telephone bill, the company said in a statement. "Unbeknownst to us, two companies that engaged in a sophisticated fraud scheme were apparently able to circumvent" protections, the statement said.
In 2014, AT&T agreed to pay $105 million to settle claims that the company billed wireless customers for unauthorized charges for services including horoscopes, ring tones and love tips.
-- Bloomberg News