The Justice Department on Thursday accused AT&T of defrauding a federal program out of millions of dollars and assisting Nigerian scammers.
According to the lawsuit, AT&T knowingly billed the federal government for calls placed by international scammers through IP Relay services, a program for the hearing-impaired.
AT&T denied any wrongdoing.
The Federal Communications Commission reimburses telephone providers $1.30 per minute for handling IP Relay calls. The FCC does not reimburse calls placed from outside the United States or by callers who do not have a hearing impairment.
But since its creation in 2002, the IP Relay program has been widely abused by scammers in Nigeria and other countries to order goods with stolen cards and counterfeit checks, along with other fraudulent schemes.
To combat fraud, the FCC in 2008 adopted rules to require that telephone companies register IP Relay users and verify their names and mailing addresses.
But according to prosecutors, AT&T feared losing the reimbursements for fraudulent calls and adopted a system that it knew would not root out scams.
The lawsuit claims that as much as 95 percent of AT&T’s IP Relay calls after November 2009 were made by international users to scam American merchants.
“As a result of AT&T’s false and fraudulent claims for payment of international callers, whose misuse of IP Relay was facilitated by the company’s deficient registration processes, the United States has paid millions of dollars for calls by Nigerian and other international fraudsters,” DOJ alleged in its lawsuit.
The prosecutors asked for AT&T to pay triple the money it made from the scammers in damages.
AT&T insisted that it followed the government’s rules.
“AT&T has followed the FCC’s rules for providing IP Relay services for disabled customers and for seeking reimbursement for those services,” AT&T spokesman Marty Richter said. “As the FCC is aware, it is always possible for an individual to misuse IP Relay services, just as someone can misuse the postal system or an email account, but FCC rules require that we complete all calls by customers who identify themselves as disabled.”