Justice Department Files False Claim Act Against AT&T, Alleges Participation in Fraud

The Justice Department has filed a suit against AT&T, alleging that AT&T knowingly permitted its IP Relay system to be used fraudulently by users overseas, and then received reimbursement from the federal government for that use.

The 1990 Americans with Disabilities Act led to the creation of a nationwide telecommunications relay service, know as IP Relay, for deaf and speech-disabled people to communicate through phone lines. Pursuant to the Act, phone carriers implement the system and are reimbursed by the federal government. AT&T received $16 million in federal reimbursements in the last two and a half years alone.

The federal complaint alleges that AT&T deliberately employed a verification system that would not detect fraud, and that the company permitted the fraudulent use of its IP Relay system in order to collect government reimbursements. Fraudulent use of this system is popular among oversees con artists who intend to defraud American merchants, according to the National Law Journal.

The complaint states, “AT&T adopted electronic registration procedures that it knew would not verify that each user was located at the U.S. mailing address provided. AT&T also failed to adopt any procedure to detect and/or prevent dozens of fraudulent users from registering with the same U.S. mailing address, despite knowing that this was occurring on its system.”

For its part, AT&T denies the allegations and maintains that it is bound by federal law to complete all calls by customers who identify themselves as disabled.  The suit was spurred by whistleblower Constance Lyttle, a former employee of AT&T. The Justice Department is seeking the money paid to AT&T in reimbursements, along with $11,000 in treble damages for each abuse.

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