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AT&T alleges reselling scam

The telco giant files suit for $7 million against several California companies for reselling toll-free service to Internet service providers.

AT&T (T) has filed suit for $7 million against several California companies, alleging that they have committed fraud by reselling the telephone giant's toll-free service to Internet service providers.

The suit, filed yesterday in U.S. District Court for the Central District of California, also alleges that Riverside, California-based Connect America, its parent ICB Telecommunications, and its affiliates defrauded AT&T of millions of dollars in unpaid charges for toll-free service by setting up fictitious accounts and reselling the service for profit to ISPs.

"They would call AT&T to arrange toll free service using fraudulent information, they would then resell that service to their customers," an AT&T spokeswoman said. "The customers paid Connect America, but Connect America was not paying AT&T.

"We don't know what the impact will be. The services were fraudulently obtained by Connect America, and we hope that innocent customers were not harmed," she added.

The suit also names a number of other companies, including toll-free service provider One Source.

Connect America could not be reached by press time for comment.

According to AT&T, the company restricted Connect America's accounts, the group established additional fraudulent accounts. AT&T says it discovered the alleged scam through telecommunications systems monitoring and investigative work.

AT&T is seeking an injunction and an attachment of the defendants' assets as well as compensatory and punitive damages.