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AT&T bilked federal government on scam calls, lawsuit says

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Saturday, Jan. 7, 2012

A former AT&T phone operator claims the telecommunications company bilked the federal government out of millions of dollars by knowingly allowing international criminals, mostly Nigerians, to scam Americans with phony credit card orders and wire transfers.

The federal lawsuit filed by Constance Lyttle, 54, of Mercer says company officials knew 95 percent of the time spent on calls made via IP relay, a service intended for people with hearing or speech disabilities, was being used by criminals wanting to disguise their location.

AT&T encouraged operators to keep the calls going as long as possible because the government reimburses companies by the minute for them, the lawsuit states.

"It's just so horrible that they knew that these were scams, and yet they forced their employees to put them through," said attorney Rebecca Lyttle, who is representing her sister in the lawsuit.

AT&T spokesman Marty Richter declined to comment. The company has not responded to the lawsuit in court.

The FBI's Internet Crime Complaint Center put out a notice in 2004 warning about a "dramatic increase in the number of complaints from online businesses" victimized by international criminals through the IP relay.

In 2009, it issued another alert notifying auto repair shops that they were being targeted by criminals using the relay service to charge shipping fees to a stolen credit card number and then directing the business to wire the money to the person "shipping" the car.

Constance Lyttle worked at AT&T's relay center in New Castle from 2002 until she was fired in 2010, the lawsuit states. Rebecca Lyttle said the company fired her sister because she voiced opposition to the policy regarding scam calls.

Constance Lyttle filed the lawsuit in 2010 under a law that allows private citizens to sue for fraud on behalf of the government. If successful, she could receive part of the damages awarded to the government.

The federal government plans to file its own complaint in the lawsuit, which was unsealed in December. The U.S. Attorney's office declined to comment.

The Justice Department filed a notice on Dec. 21 stating that it decided to partly intervene in the case, which means it will pursue some of the allegations Lyttle has made against AT&T while leaving her to pursue the other claims. The notice does not say which claims the government intends to pursue, but says the government will file its own complaint in the next 60 days.

Duquesne University law professor Michael Streib, an expert in federal civil law who is not involved in the case, said it won't be clear why the government is only partly intervening in the case until it files its complaint, but the simple answer is that "there might be some claims they're simply not interested in."

The government might want to go after the money it paid to AT&T or it possibly wants a say in how the law at the heart of the case gets interpreted, he said.

The Federal Communications Commission requires telecommunications companies to provide IP relay to people with hearing or speech disabilities. The caller uses computer software to communicate with an operator, who relays his or her messages over the phone to the person or company being called, as well as responses back to the caller.

The service is free for users. Companies are reimbursed from the Telecommunications Relay Services Fund, which is funded by a federal tax on their annual revenue.

The FCC website notes that companies that provide the service are not allowed to intervene in the phone calls. Both federal disability laws and telecommunications laws require that conversations made through the service be "functionally equivalent" to voice phone calls.

An FCC spokeswoman declined comment because of the lawsuit.

Federal regulations require that operators "relay all calls verbatim and generally prohibit (them) from intervening in any conversation," the FCC website states.

Lyttle said federal regulations, and AT&T's policy, allow operators to stop calls if they believe the caller is attempting to commit a crime.

The service has attracted criminals almost from its inception more than 10 years ago. The FCC started warning businesses in 2004 that scam artists were using the service to place fraudulent credit card orders and money transfers.

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