Feds: AT&T Put Fraud on Government Tab

The Justice Department has accused AT&T of bilking the government out of more than $16 million by purposely allowing Nigerian fraudsters to abuse a service intended to help deaf Americans. AT&T says it's just following FCC rules requiring it to offer a free IP Relay service, which allows the deaf to type messages for an operator to read. The government then reimburses AT&T for the calls at $1.30 per minute, Bloomberg explains. But the Justice Department says 95% of the calls AT&T facilitated were from foreign con artists, mainly from Lagos, Nigeria.

In 2008, the FCC required AT&T to verify callers were US residents. At first, AT&T complied by mailing out postcards that needed to be returned. Revenue plummeted, and the company feared it would miss its projections. “We are expecting a serious decline because traffic from fraud will go to zero,” one technical manager told company executives. Soon after, AT&T allowed people to simply enter an address online. Registration soared, and internal emails indicate the company knew it was because of fraud—but did nothing to combat it, the complaint alleges. (More Justice Department stories.)