By Bob Sullivan Technology correspondent
msnbc.com
updated 4/20/2004 4:15:16 PM ET 2004-04-20T20:15:16

It was designed to help the hard of hearing have full access to America's telephone system, and hailed as an equal opportunity success story. But some say it's now become a favorite tool among international con artists trying to bilk U.S. merchants out of millions of dollars.

Max Andrews' story is typical. He figures his small bridal shop in Dothan, Ala., has been involved in most of the tiny town's weddings for the last 35 years. The boutique, which only has a one-page Web site, never had any designs on international clientele. Still, Andrews Bridal Shop received a surprising $5,500 order four weeks ago. The customer wanted 10 identical wedding gowns shipped to Lagos City, Nigeria, immediately. And that wasn't the only surprise.

The customer, most certainly a con artist, was posing as a deaf person, taking advantage of a publicly-funded tool designed to let hearing impaired people use America's phone systems. Hiding behind a so-called "relay operator," a telecommunications employee who acts as a go-between when a deaf person calls a hearing person, the caller tried to use six different stolen credit card numbers to pay for the purchase. And by using the relay system paid for by American consumers, the con artist didn't even have to pay for a pricey international call.

Telephone operators who help the deaf use the Internet to make phone calls say the system is being overrun by con artists trying to cheat American merchants.

Starting two years ago, companies like MCI and AT&T began offering free calls to the hearing-impaired through Internet Web pages. Hard of hearing consumers type their messages into dialog boxes similar to those used in Internet chat rooms; on the other end of the line, a relay operator reads the text, places the call, and verbalizes the text for the call recipient. 

Relay services date back to the 1960s; their use became widespread in the 1990s, after they were mandated by the Americans with Disabilities Act of 1990. But in their initial form, they required callers to lug around keyboards known as TTY devices in order to place calls.  In 2002, several companies launched the Internet equivalent of the service, called IP relay, which is much easier to use and more widely available. Both systems are still in place.

Either way, there is no cost to the caller. Costs are covered by the Telecommunications Relay Service Fund, collected via a small fee long-distance companies pay for every minute of service they sell.

Relay service has been hailed as a success by the deaf community. Available 24 hours a day, seven days a week, they give those who are hard of hearing equal access to America's vast telephone network.

But the system also offers that same free access to criminals looking to cheat U.S. merchants. The Internet-based relay system lets con artists call for free, even from far away places like Nigeria. It also helps disguise a caller's broken English, which in some cases could be a scam tip-off, and adds an air of sympathy to the call that might make otherwise suspicious merchants drop their guard.

It's not clear how widespread the problem is. Both MCI and AT&T concede con artists have used their systems, but say their impact is limited. MCI spokeswoman Natasha Haubold said scams impact about 1 percent of their system's calls -- down from 2 percent last year, when the company began implementing tighter security controls. AT&T refused to discuss the prevalence of the calls.

'Unbelievably frustrating'
But operators who work at the call centers paint a different picture. Some claim they spend half their day relaying calls placed by con artists. Adding to their frustration: operators must pledge complete secrecy as to the content of the phone calls. Otherwise, people would be suspicious of the service. So when a criminal calls in, the operators must relay the call without interfering.

"It was so unbelievably frustrating. ... It was pure evil. Enough to make anyone snap," said Robert Grodevant, a former operator who resigned in frustration from MCI's service in March.  He says that one day, he participated in $40,000 worth of scam calls.  "You'd be saying to yourself, 'No, don't do it. Just hang up.' But there was nothing you could do."

Frustrated operators regularly vent their complaints anonymously -- and discuss ways to foil the con artists -- on various Internet forums. They also claim the dramatic increase in con artist calls helped cause a revenue shortfall faced by the relay service fund earlier this year.  

In February, the Federal Communications Commission conceded that the Telecommunications Relay Service Fund was in danger of running out of money, thanks in part to skyrocketing demand for the Internet relay service. To raise an additional $55 million and keep relay services operating through June, fees that fund the service were raised nearly 50 percent.

Officials at the National Exchange Carrier Association, which administers the relay service fund for the FCC, were unavailable for comment.

Warnings issued
Some government authorities are starting to note the problem. In February, the South Dakota state attorney general's office issued a warning about fraudulent relay calls. So did the FBI's Internet Fraud Complaint Center. In a notice published Feb. 9, the agency said it "has seen a dramatic increase in the number of complaints from on-line businesses, who have been victimized by the perpetrators’ inappropriate use of the IP-Relay to facilitate their criminal activity."

Credit card processors are apparently taking notice, too. TermNet Merchant Services, Inc., based in Atlanta, issued a warning to its business partners just last week.

"Just when merchants got wise to watching for 'odd' telephone orders, the fraud callers began using the relay system for the hearing impaired to cover any accent or awkwardness that might suggest a problem," the warning said.

Small merchants targeted
Con artists regularly target small merchants across the country, said Margaret Mulligan, director of security and risk management at TermNet.

"They are really targeting mom and pops, who often wonder 'How in the world could they even find me from Nigeria.' " she said. "What a lot of the merchants don't know is if you are in a phone book, they can find you."

The criminals seem to attack merchants industry by industry, she said. Before hitting bridal shops like Andrews' store, Christian stores selling Bibles and Gospel tapes were a regular target, Mulligan said. Before that, it was office supply stores selling toner cartridges. As one industry gets wise to the scheme, the con artists seem to just skip to a new one.

"Anything that could be resold is attractive," said Mulligan.

In each scam, the common thread is use of the Internet relay system to place the order.

"I think there is a perception that this is a handicapped person, and you want to bend over backwards for this person," she said.

The good news, according to Mulligan and several relay operators: Many merchants still recognize the cons and never fill the order. The bad news is that some merchants are becoming conditioned to think all relay calls are prank calls.

"You do have people who just right away say, 'I'm not taking this call,' now," Grodevant said.  "And that's a shame. Internet relay is a wonderful thing."

Ironically, this is one situation where the old-fashioned method is probably safer. Old TTY-based relay services require a special keyboard, setting the bar far too high for would-be criminals. All involved say the old-fashioned system hasn't been targeted by con artists.

Internet-based relay services, however, will likely remain a target for criminals. Still, operators say merchants shouldn't be reticent to deal with Internet relay calls. Instead, they just need a healthy dose of common sense.

AT&T recommends merchants be skeptical about orders when multiple sets of credit cards are attempted for billing, and also suggests merchants request a U.S. telephone number and U.S. contact information for all orders.

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