AT&T agrees to drop $1.15M suit against phone hacking victim

AT&T (NYSE: T) decided to drop its $1.15 million suit against Salem, Mass. business owner Michael Smith, a victim of a phone hacking scheme.

The telco dropped their suit against Smith following a report in local newspaper The Salem News, which broke out into the national mainstream when the Associated Press (AP) picked up on the story.

"We are no longer pursuing these claims, though we are entitled by law to collect the amounts owed," said Kate MacKinnon, a spokeswoman for AT&T, in a statement.

But AT&T wants something in return from Smith: they want him to drop his countersuit accusing the telco of abusing the legal process and violating state consumer protection laws.

In 2009, Smith said that someone hacked into his PBX and made $900,000 in calls to Somalia. Later, AT&T sued Smith for $1.15 million to recoup the cost of the calls and interest.

What's interesting is that Smith's voice service provider is actually Verizon (NYSE: VZ), not AT&T. When Verizon noticed $260,000 worth of international calls being made in just one weekend, the service provider turned off his company's ability to make international calls. Later, Verizon decided to write off the $260,000 charges.

To carry out their scheme, the hackers used AT&T as a "dial around" long-distance service.

While AT&T acknowledged the calls were fraudulent, they argued that Smith should have put in more safeguards to protect his phone system and that they can collect charges from the owner of the phone line used to make calls.

Phone hacking is not just relegated to small business owners alone.

Rupert Murdoch's News of the World came under fire last year for illegally accessing voicemail messages of two sets of crime victims: an abducted 13-year old girl found murdered and relatives of people killed in London's July 7, 2005 bombings.

For more:
- The Salem News has this article
- AP has this coverage

Related articles:
Paul McCartney will talk to police about phone hacking scandal; Netflix rate hikes won't drive away subscribers
Arrests made in international hacking-fraud ring
UK officials to discuss phone-hacking incident; Italian space agency tries broadband satellite service
FairPoint, Maine law enforcement crack down on phone scammers targeting seniors

Suggested Articles

BT Ireland and Huawei are laying claim to the first 1.2 Tb/s transmission real-time trial based on a commercial product platform in a live network.

Google Fiber announced this week it was pulling the plug on its 100 Mbps service to new customers in order to just offer its gigabit service.

MEF outlined an ambitious roadmap at last month's MEF19 conference that included deeper partnerships with cloud providers using the LSO Sonata APIs.