AT&T fined for sham directory assistance service, customers to get refunds

Company let scammers bill customers $9 per month for bogus service

AT&T Services has agreed to pay $7.75 million for its role in a directory assistance scam that Drug Enforcement Agency (DEA) investigators stumbled onto while probing a drug-sales and money-laundering operation.

Scammers "crammed" AT&T wireline customers $9 a month for the non-existent service even though they were never able to provide evidence that the customers had ordered the service, investigators said.

“A phone bill should not be a tool for drug traffickers, money launderers, and other unscrupulous third parties to fleece American consumers,” said Federal Communications Commission (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.”

Cramming scam

The DEA discovered the cramming scam while investigating two Cleveland-area companies, Discount Directory, Inc. (DDI) and Enhanced Telecommunications Services (ETS) for drug-related crimes and money laundering. 

In the course of seizing drugs, cars, jewelry, gold, and computers totaling close to $3.4 million from the companies’ principals and associates, DEA investigators discovered financial documents related to a scheme to defraud telephone customers, according to the FCC. 

AT&T received a fee from the companies for each charge AT&T placed on its customers’ bills. Although DDI and ETS submitted charges for thousands of AT&T customers, they never provided any directory assistance service. 

Under the terms of today’s settlement, AT&T will issue full refunds to all current and former consumers charged for the sham directory assistance service since January 2012. These refunds are expected to total $6,800,000. AT&T will also pay a $950,000 fine to the U.S. Treasury.  

Third-party products

The FCC said that as part of the settlement, AT&T has agreed to 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.  

In addition, the Consent Decree requires AT&T to implement a detailed program for addressing and refunding consumers who complain to the company about unauthorized third-party charges. 

It's not the first time AT&T has been implicated in cramming schemes. In 2014, it agreed to pay $105 million in fines and refunds to current and former wireless customers for unauthorized third-party subscriptions and premium text messaging services as part of a global cramming settlement with the FCC, Federal Trade Commission, and states’ attorneys general.  


Stay informed

Sign up for The Daily Consumer

Get the latest on recalls, scams, lawsuits, and more

    By entering your email, you agree to sign up for consumer news, tips and giveaways from ConsumerAffairs. Unsubscribe at any time.

    Thanks for subscribing.

    You have successfully subscribed to our newsletter! Enjoy reading our tips and recommendations.