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Feds Sue AT&T Over Alleged $16M IP Relay Fraud

By Andrew Chow, Esq. on March 27, 2012 | Last updated on March 21, 2019

AT&T failed to prevent foreign scam artists from taking advantage of its IP Relay service, and then improperly collected $16 million in government reimbursements, a new lawsuit claims.

The Justice Department sued AT&T in federal court in Pittsburgh, Pa., over the telecom giant's Internet protocol relay service, known as IP Relay, PC Magazine reports. The service is supposed to allow deaf and hearing-impaired customers to type Internet messages that are read aloud to a recipient by an AT&T operator.

But since 2009, more than 95% of AT&T's IP Relay calls have been made by foreign scammers, the Justice Department alleges. And AT&T has been improperly raking in taxpayer money from the calls.

Under a Federal Communications Commission program, AT&T gets reimbursed at a rate of $1.30 per minute for IP Relay calls, the Atlanta Journal-Constitution reports.

However, AT&T failed to verify its IP Relay users as required by FCC rules, the Justice Department's lawsuit asserts. As a result, foreign scam artists -- mainly from Nigeria -- took advantage of AT&T's IP Relay.

And though AT&T knew about the foreign scammers' IP Relay calls, the company continued to seek FCC reimbursement for those calls, to the tune of more than $16 million, the feds' lawsuit asserts, according to PC Magazine.

"Taxpayers must not bear the cost of abuses of the Telecommunications Relay system," the federal prosecutor who filed the case said in a statement.

But AT&T insists the company did not break any laws. "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," an AT&T spokesman told Ars Technica, "but FCC rules require that we complete all calls by customers who identify themselves as disabled."

The Justice Department's AT&T IP Relay lawsuit was inspired by a whistle-blower's complaint at one of AT&T's call centers, the Journal-Constitution reports. In a separate action, AT&T is currently suing the FCC over changes to a federal subsidy program for rural broadband service.

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