US telco giant AT&T has been fined $7.75m after scammers were found sneaking bogus charges onto customer bills.
The punishment was levied by America's comms watchdog the FCC. The regulator said the US Drug Enforcement Agency (DEA) was to thank for uncovering the scam in which criminals were duping landline customers into paying a monthly $9 charge for a fake "Directory Assistance" service.
To pull off the swindle, the criminals contacted thousands of small businesses and offered the fake service, then signed the victims up for the $9 recurring charge, a portion of which was then kicked over to AT&T.
The operation was only uncovered after the criminals behind it were raided by the DEA for drug and money laundering charges. In the course of bringing down two companies, agents also found documents outlining the Directory Assistance scam, at which point the FCC was called in.
Most of the fine will go toward refunds for the customers who were victimized by the scheme. The FCC says it will give $6.8m of the fine back to customers, while the remaining $950,000 will go into the US Treasury's pocket as a penalty for letting the criminal operation go unchecked.
"A phone bill should not be a tool for drug traffickers, money launderers, and other unscrupulous third parties to fleece American consumers," FCC enforcement bureau head Travis LeBlanc said in announcing the fine.
"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."
This isn't the first time AT&T has been fined by the FCC for allowing bogus charges onto customer bills. In 2014, the carrier was fined $105m for its complacency in a series of bill "cramming" scams.
The FCC said that this latest penalty will not impact the terms of the 2014 cramming settlement. ®