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.)
