US mobile network AT&T has agreed to pay $7.75m (£5.96m) out to thousands of subscribers including multiple small businesses for letting fraudsters bill customers for fake services.
Criminals accused of running a drug ring supposedly used the method to launder their money, paying a fee to AT&T to place charges on customers’ bills for a fake directory assistance service that was never provided.
“A phone bill should not be a tool for drug traffickers, money launderers and other unscrupulous third parties to fleece American consumers,” said Travis LeBlance, chief of the FCC’s enforcement bureau, who ruled on the settlement.
“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 unauthorised charges.”
The scheme largely targeted AT&T landline bills for small businesses, charging them for non-existent services. The fraud was uncovered by the US Drug Enforcement Agency, who seized drugs, cars, jewellery, gold and computers from those involved.
The refunds are expected to total around $6.8m, with AT&T also paying a fine of $950,000 to the US Treasury for failing to protect its customers. It’s not the first time the company has been caught up in this type of scam – in 2014, the firm had to pay out $105m to mobile customers for unauthorised charges for services including ring tones, horoscopes and love tips.
As carrier billing becomes an increasingly popular method of payment for digital services and products, mobile network operators will have to remain vigilant against sophisticated schemes that aim to mimic charges on consumer bills, or face potential fines and bad publicity.
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