AT&T improperly received millions of dollars in federal payments in a case of fraud involving a service designed for the deaf and hard-of-hearing, the U.S. government has alleged in a lawsuit.
The U.S. Department of Justice claims AT&T violated the False Claims Act, which is a law that imposes liability on companies who submit false claims for the payment of government funds and allows whistleblowers to share in any recovery from a successful lawsuit.
AT&T, the lawsuit alleges, sought payment for so-called IP Relay calls by international callers who were ineligible for the service and attempted to use it to commit fraud.
A former worker in one of AT&T's IP Relay call centers tipped off authorities.
IP Relay is a text-based communications service designed to allow the deaf and hard-of-hearing to place phone calls by typing messages over the Internet.
Representatives employed by AT&T and other providers relay such messages, and these companies are reimbursed by the Federal Communications Commission at a rate of $1.30 per minute, according to the Justice Department.
Foreigners have used the system to defraud American merchants with stolen credit cards and by other means, and the FCC three years ago began requiring IP Relay providers like AT&T to verify the accuracy of each registered user's name and mailing address in order to cut down on abuse, the Justice Department said.
The lawsuit alleges that AT&T failed to verify whether a person was located within the U.S. "out of fears that fraudulent call volume would drop after the registration deadline." AT&T also is accused of continuing this behavior despite knowledge that it was facilitating use of the IP Relay service by foreign callers who were committing fraud. Most of the foreign activity was taking place in Nigeria, according to The Wall Street Journal.
"Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States," said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice. "We will pursue those who seek to gain by knowingly allowing others to abuse this program."
AT&T apparently has denied any wrongdoing. "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 told The Wall Street Journal.
The case was filed in a federal court in Pennsylvania and is U.S .ex rel. Lyttle v. AT&T Corp.