AT&T has agreed to pay a fine of $7.75 million to settle a dispute with the Federal Communications Commission (FCC) to resolve yet another “cramming” allegation.

According to the FCC, AT&T allowed scammers to charge some customers (mostly small businesses) roughly $9 per month via monthly phone bill for a sham directory assistance service.

The cramming scam, run by Cleveland-area companies Discount Directory, Inc. and Enhanced Telecommunications Services, was uncovered during an investigation by the US Drug Enforcement Agency (DEA) on drug-related crimes and money laundering.

Specifically, the DEA found documents related to a scheme to defraud telephone customers. When questioned, the suspects revealed that they had set up the companies to bill thousands of consumers for a fraudulent directory assistance service.

The FCC notes that AT&T received a fee from the companies for each charge placed on its customers’ bills. Neither the companies involved nor AT&T could prove that customers agreed to be billed for the sham service.

Enforcement Bureau Chief Travis LeBlanc said a phone bill should not be a tool for drug traffickers, money launderers and other unscrupulous third parties to fleece American consumers. The settlement, he added, will ensure that AT&T customers who were charged for the phony 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.

As per the settlement, AT&T will issue full refunds to all current and former customers that were charged for the bogus service since January 2012. The refunds are expected to total $6.8 million; the remaining $950,000 will be assessed as a fine paid to the US Treasury.

Image courtesy Jonathan Weiss, Shutterstock