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Telcos have a responsibility to ensure third-party charges were approved by the customer, FCC says.
The Federal Communications Commission on Monday announced that AT&T must pay US$7.75 million to compensate customers for sham directory assistance services that it allowed to be charged to their phone bills.
The U.S. regulator explained that in the course of an investigation into two companies in the Cleveland area – Discount Directory Inc (DDI) and Enhanced Telecommunications Services (ETS) – for drug-related crimes and money laundering it had discovered a "cramming scam" whereby customers were billed for directory assistance services they never received.
AT&T received a fee from the companies for each charge it placed on its customers’ bills, the FCC said. Thousands of customers, many of which are small businesses, were affected by the scam.
The regulator has agreed a settlement with AT&T that will see it issue full refunds worth a total of around $6.8 million to current and former customers charged for the service in the period since January 2012. The telco will also pay a fine of $950,000 to the U.S. Treasury.
"Phone companies like AT&T have a responsibility to ensure third-party charges are legitimate and were approved by the consumer," the FCC said, in a statement.
The regulator said it has taken action against carriers for cramming and unauthorised switching in more than 30 cases in the last five years, levying penalties totalling $360 million.
This latest case is not the first time AT&T has found itself on the wrong side of the law. The telco agreed to pay $105 million in fines and customer refunds for unauthorised third-party subscriptions and premium SMS services in 2014.
