AT&T Inc. got more than $16 million from the U.S. government to offer a calling service for the deaf that the company knew was being used by Nigerian fraudsters to steal from American merchants, the Justice Department said.
The U.S., which intervened in a whistle-blower lawsuit in federal court in Pittsburgh, alleges that AT&T allowed an Internet-based phone system to be overrun by criminals and then improperly billed the U.S. to reimburse the calls in violation of the False Claims Act.
As many as 95% of the calls in AT&T's hearing-impaired program were made by people outside the U.S. attempting to defraud merchants through the use of stolen credit cards, counterfeit checks and money orders, according to the complaint.
"Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States," Stuart Delery, acting assistant attorney general for the Justice Department's civil division, said Thursday in a statement. "We will pursue those who seek to gain by knowingly allowing others to abuse this program."
The government is seeking triple damages.
AT&T spokesman Marty Richter said the Dallas company followed rules set by the Federal Communications Commission for providing Internet Protocol Relay services and for seeking reimbursement for those services.
"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," Richter said.
FCC spokesman Neil Grace said IP Relay practices are a "serious problem" that the commission is continuing to investigate.