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AT&T Web Site Hacked; Customer Data Exposed

By Martin H. Bosworth
ConsumerAffairs.com

August 30, 2006

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AT&T reported late Tuesday that a group of hackers had gained access to a company Web site used to sell equipment for its DSL services, gaining access to the personal information of roughly 19,000 customers.

Details of the breach were scant, but AT&T said in a statement that the breach was discovered the previous weekend, and the site was shut down "within hours."

AT&T is notifying potentially affected customers via phone and mail, and has promised to pay for free credit monitoring for anyone affected.

"We will work closely with law enforcement to bring these data thieves to account," said Priscilla Hill-Ardoin, the company's chief privacy officer.

AT&T spokesman Walt Sharp said that he could not specify exactly when the breach occurred, but emphasized that no fraudulent activity had been reported and that, "credit card companies usually indemnify the victims in these cases."

Sharp's view was echoed by stock analyst Todd Rethemeier, who told Bloomberg financial news that, "Nineteen thousand customers is a drop in the bucket for AT&T ... It's bad for public relations but not significant."

Rethemeier's advice aside, the world's largest telephone company has taken a profound beating in the public perception department, not least due to its ongoing role in the controversy surrounding the NSA's wireless surveillance program. AT&T, along with its future merger partner BellSouth, and Verizon, have been accused of handing over records of thousands of customers to the government.

AT&T in particular was accused of aiding the NSA in setting up surveillance technology on its phone lines to track customer calls in and out of the United States.

AT&T recently filed suit against groups of third party data brokers that it accused of posing as customers and purchasing data on individual calling records, which they then resold at profit to law enforcement agents and private buyers. The FCC chastised the company for not having proper privacy safeguards in place to prevent that level of fraud.

And AT&T remains in the hot seat over the issue of "net neutrality," the principle that access to content on the Internet must be free and equal for all Web users. The company, along with Verizon, is one of the chief opponents of net neutrality, saying that regulations would interfere with its deployment of high-speed broadband networks and Internet-over-TV services to its customer base.

AT&T's recent acquisition of BellSouth hit a snag when the former Bell sibling imposed and then retracted an unexplained new fee on its DSL customers, after winning relief from having to pay into the Universal Service Fund. Threats of inquiry from the FCC, on which approval of the AT&T-BellSouth merger rests, cajoled BellSouth into withdrawing its "regulatory cost recovery fee."

Nevertheless, Ma Bell's favorite spawn continues to win huge contracts and business for providing sensitive data services. The company recently won a $250 million contract to provide data and networking services to the Hawaii offices of the Defense Department's Defense Information Systems Agency (DISA).

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