AT&T's been accused of cheating the government by letting fraudsters take advantage of a subsidized phone service intended for deaf people.
IP Relay is a service for people with hearing problems that allows them to place calls by typing messages that are then relayed by communications assistants. The service is provided free, with the FCC refunding service providers at a rate of around $1.30 per minute.
But, two years ago, in an effort to reduce fraud, the FCC started asking providers to verify the name and mailing address of users - and this was when alarm bells started ringing.
According to the Department of Justice, AT&T was concerned that its call volumes would fall after the registration deadline, and so adopted an inadequate registration procedure that didn't ask whether callers were actually in the US. The department's accused AT&T of violating the False Claims Act accordingly.
"Federal funding for Telecommunications Relay Services is intended to help the hearing- and speech-impaired in the United States," says Stuart F Delery, acting assistant attorney general for the Civil Division of the Department of Justice.
"We will pursue those who seek to gain by knowingly allowing others to abuse this program."
According to the department, AT&T carried on using its non-compliant registration system, knowing full well that an astonishing 95 percent of callers using the relay system were fraudsters based abroad.
The fraudsters were making the calls in order to defraud merchants using stolen credit cards, counterfeit checks and money orders.
As a result of allowing these calls, AT&T improperly billed the TRS fund for millions of dollars, says the department.
"Taxpayers must not bear the cost of abuses of the Telecommunications Relay system," says said David J Hickton, US attorney for the Western District of Pennsylvania.
"Those who misuse funds intended to benefit the hearing- and speech-impaired must be held accountable."