AT&T will pay nearly $7 million in restitution to consumers who were victims of a scam in which a couple of sham companies were allowed to bill wireline customers for fake district assistance services without their consent or knowledge.
The settlement is the result of an investigation that began when the Drug Enforcement Administration was looking into an organization that was conducting money laundering and selling drugs. The investigators found that two front companies run by the traffickers were also running the operations to bill consumers for the directory assistance service that never existed. Victims of the scam were paying $9 a month for the imaginary service, according to the FCC.
“A phone bill should not be a tool for drug traffickers, money launderers, and other unscrupulous third parties to fleece American consumers,” said FCC Enforcement Bureau Chief Travis LeBlanc. “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 on their phone bills in the future.”
This settlement is the second time in two years that AT&T has been hit with fines for cramming.
As part of the scheme, known as cramming, the two front companies, Discount Directories and Enhanced Telecommunications Services, paid AT&T a fee for every time it was able to place the charge on a consumer’s bill. None of the companies could provide and proof that consumers agreed to the fees, the FCC said.In addition to the restitution of $6.8 million that AT&T will pay victims, the company also has to pay $950,000 in fines. The FCC also got some key concessions from the company to protect consumers from similar scams in the future.
“The Enforcement Bureau has also secured strong consumer protections in the settlement that include requirements that AT&T cease billing for nearly all third-party products and services on its wireline bills, adopt processes to obtain express informed consent from customers prior to allowing third-party charges on their phone bills, revise their billing practices to ensure that third-party charges are clearly and conspicuously identified on bills so that customers can see what services they are paying for, and offer a free service for customers to block third-party charges,” the settlement says.
This settlement is the second time in two years that AT&T has been hit with fines for cramming. The first time, in 2014, the company paid $105 million in fines and restitution for cramming on wireless customers’ bills.