AT&T sued phone hacking victim for $1.15m

Michael Smith's phone bill is usually $700. In 2009, criminals hacked the Ipswitch, Mass. man's business phone and racked up $891,470 in calls to Somalia. Julie Manganis of The Salem News reports that AT&T—which isn't even his service provider, just a hop in the international call chain--sued him for $1.15m over fraudulent charges it admits he did not rack up.

The telecom giant is hinging its case, filed last year in U.S. District Court, on two legal theories: that Smith’s firm should have taken more precautions to prevent unauthorized access to its phone system, and that under Federal Communications Commission regulations, it’s entitled to collect from the owner of the phone line that was used to make the call, regardless of who actually made the call.

Smith said he’s tried to resolve the matter, even trying to contact the CEO of AT&T. But two weeks later, he was told by a secretary that because the matter was being handled by “outside counsel,” there was nothing the company could do for him.

The nastiest part? Hard to pick just one, but getting a federal magistrate to move the action from a real courtroom to "mediation" has PR optics to die for. Fortunately, AT&T dropped the case when the press noticed it: a happy, if hilariously unprincipled outcome. (Kudos to Verizon, his actual service provider, for noticing the fraud, shutting it down, and forgiving him its $260,000 portion of the bill.)

• [10xor01]

  This will not stand. AT&T, you just lost a customer.

  • [Anon Kopimi]

    Michael Smith should make a counter-condition for dropping his counter-suit:

    AT&T pays legal costs and the costs their suit caused to his business.

  • [pre installed]

    I agree with 3
    Got a kick out or your userid, because I didn’t understand previously 10 XOR 01 = 11 (3 in binary).

• [Jer_00]

  I think that the important thing about this story is that AT&T wasn’t even his provider.  He didn’t have a contract with them – shouldn’t AT&T be suing Verizon, since Verizon was his provider and the company who was responsible for putting the calls onto AT&T’s lines?  (The article says that Verizon noticed the scam calls and shut down international call ability when they saw a quarter million in international calls made one weekend).

  I know the answer to that.  It’s because Verizon would laugh in their faces and say “see you in court” because Verizon can afford to fight back.  But they found a guy who can’t afford to fight back and they think they can bleed the money out of him instead.

  • [Guest]

    I’m pretty sure the answer actually is exactly what you said.  I wonder how AT&T will be able to argue in court that the failures of security were this man’s fault but not Verizon’s?

    I guess fraud protection only means, “we’ll protect you…unless it costs lots of money.  The technology you invented to prevent this, which you didn’t because we did, being a phone company and all, is lacking.

    I know.  We need to spring Bernie Madoff and make all of those supposed “victims” pay for what their charity organizations…I mean his…I mean theirs…did.

• [boinggroin]

  It ain’t dropped yet:
  “Smith said the offer depends on his dropping a countersuit. He’ll meet with his attorney about it on Tuesday. ”

• [Jonathan Badger]

  Ipswich, MA is mentioned as being near Lovecraft’s Arkham and Innsmouth in “The Shadow Over Innsmouth”. Phone hacking by Somalis? More likely the Esoteric Order of Dagon is to blame.

  • [Felton / Moderator]

    The Phone Call of Cthulhu?

    • [Robert]

      If you thought Smith’s bill was awful, wait till you see The Statement of Randolph Carter.

      • [Joff Leader]

        That whole ten hour call was on Warren’s bill.

• [royaltrux]

  Hell, I would have simply Skyped my homies.

• [Cameron Postelwait]

  i hate that ‘outside counsel’ shit. i should just hire a hit man to kill the people i dislike and when they plead for their life i can say ‘sorry, out of my hands, outside counsel is handling this’.

  • [Guest]

    Is “Postal” more appropriate for you?

• [Enkinan]

  Not surprised, I vowed years ago never to give those pigs a dime as long as I live. I’ve seen some pretty fucked up business practices out of them as a former employee of some of their “babies”.

• [sgtdoom]

  Speaking of AT&T and the White House:

  http://yro.slashdot.org/story/12/07/10/1611237/executive-order-grants-us-govt-new-powers-over-communication-systems

  http://www.whitehouse.gov/the-press-office/2012/07/06/executive-order-assignment-national-security-and-emergency-preparedness-

• [Enoch_Root]

  This is in no way dismissing the underlying insanity of this case but I wouldn’t say that going to mediation is the worst part. Depending on the court rules you are required to mediate in federal court before trial.

  That said AT&T definitely had their heads up there asses and outside counsel always needs to consider the non-legal consequences of filing lawsuits. Even if you are perfectly entitled to money from someone (not saying AT&T was here) it isn’t always a good idea to crush a small business owner for what amount to pennies for a company with a $205 billion market ca and $32.5 billion in revenues.

• [Hubert Figuière]

  Telcos are legal mobs (organized crime) that have lawyers instead of hit men. Telecom fraud is a federal offence in the US (and Canada) because they lobbied governments to shut down competition.

• [snagglepuss]

  A few years ago, we decided to re-install a land line. My fiancee decided to try AT &T.
  However, an ice storm had snapped our connection to the pole.

  First, they promised us that it would cost nothing for a tech to come out and re-install the line. She set up an appointment and the tech showed up two hours late. Hooked the line back up in five minutes and presented her with a bill for $130. She complained until he called a supervisor who, after another ten minutes of arguing, agreed to forgo the installation fee.

  A month later, we got the first bill: $1800.00. AMERICAN dollars. With the re-installation fee snuck back in there, too. We’d made around four short local calls in total on the land line. The fiancee called “customer service” and raised hell.

  The supervisor monkey she spoke to told her that there was an outstanding balance on our new number for $1600. My fiancee pointed out that we’d only had the number for a few weeks, and that the bill was the responsibility of the numbers’ previous assignee. The supervisor actually told her, “I don’t care. We can’t find him, and SOMEBODY’S got to pay that outstanding balance.”

  My fiancee has an unnerving ability to not only keep her calm, but to grow menacingly calmer when dealing with morons – Yet this swine almost had her losing her cool. Finally, the AT &T scumbag told her that if we didn’t pay the entire bill, she would shut off our service – After refusing to simply re-assign us a new number to dodge the debt. which my fiancee snarlingly pointed out was how AT&T appeared to handle it’s outstanding bills.

  We both agreed that cancelling the service was obviously the best course, if this was what dealing with AT&Sonsabitches was going to be like. My fiancee told the supe to cancel the service, and the supe actually had the nerve to then REFUSE to do so until we paid the balance. My fiancee was just angry enough to ask why AT&T hadn’t taken that tactic with the number’s previous assignee, and the supe blurted out something about “company policy” and then hinted at legal action if we didn’t pay up. We STRONGLY URGED her to take that course of action, as we would LOVE to see a court’s reaction to a billionaire corporation suggesting that it had the right to randomly assign other people’s debts to its new customers.

  The supervisor said “Have A Nice Day” and hung up on us. We called back, three times, to complain to a higher power, and NO ONE WOULD CONNECT US WITH ANYONE. Each time, the AT&T rep said “Please hold while I connect you” and then hung up on us.

  We finally decided that a gang of bored AT&T drones had decided to enact a Monty Python-style sketch as a way of alleviating the tedium. It took AT&T three months to shut off the service, with a bill each month for the full amount, plus the monthly service charges, which we refused to pay. We itemized the few calls we had made and sent in a check for the  exact amount, which they cashed. Finally, one day, the line went dead and the bills stopped coming. Sometimes we wonder what poor sap they tried to re-assign that number to…..