Third-party scheme that inflated phone bills results in $7.75M fine for AT&T

As part of the scam, AT&T accidentally allowed the scammers to charge $9 per month to customers for a fake directory assistance service, which was set up by suspected drug traffickers and used to launder money. It was first uncovered by the Drug Enforcement Agency.

“Two companies that engaged in a sophisticated fraud scheme were apparently able to circumvent those protections and submit unauthorized third-party charges that were billed by AT&T,” said AT&T in a statement. While the company was not aware of the scam, it still has to pay up.

A report from the FCC highlights exactly why — AT&T received a fee each time the fraudulent service showed up on a bill, so the company was making money, knowingly or unknowingly, off the scam. Of the total fine, $6.8 million is being paid to customers in refunds, and the other $950,000 is going to the U.S. Treasury as a fine.

As part of the investigation, the DEA seized $3.4 million worth of drugs, cars, gold, and computers — all in investigating the so-called Discount Directories and Enhanced Telecommunications Services.

“Affected former and current AT&T wireline telephone customers will receive these refunds via check within 90 days,” continued the company in its statement. “We stopped billing for these entities as of June 2015 and will also cease wireline third-party billing for other third parties, with limited exceptions.”

Of course, this isn’t the first time AT&T has had to pay up to the FCC. In 2014, the company was accused of falsely charging customers for services and had to pay a much larger $105 million fine.