Avoid Fraudulent Pay Phone Calls

What It Is

Your agency may be paying extra and illegal charges for calls from pay phones.

According to Federal Communications Commission (FCC) regulations, owners of pay phones are paid a fee for every toll–free call made by their pay phone. The fee reimburses the owner of the pay phone for use of their equipment and service to make the toll–free call. This arrangement is allowed by the FCC and is a standard business practice.

However, this practice can create opportunities for fraud. Pay phone owners can attach automated equipment to registered pay phone lines to make repeated, short calls to toll–free numbers, and collect 50 to 75 cents per call in "dial around compensation" fees.

As a result of an investigation conducted by the General Services Administration, Office of Inspector General, and the Internal Revenue Service, Criminal Investigation Division, the Department of Justice charged two individuals in Wisconsin for participating in such a pay phone compensation fraud scheme (PDF, 65 KB, 2 pages, April 2011).

How To Implement

Here are a few things that you can do to identify and prevent fraudulent pay phone calls: 

• Review the monthly toll–free service provider reports to identify a pattern of abuse. The call detail reports generally include a notation if a call is made from a pay phone. You can also look at the numbers that most frequently dial your toll–free number to see if any of them are pay phones.
• If you see a pattern of abuse, ask your toll–free service provider to generate a report that looks for short calls that are unlikely to have resulted in a meaningful conversation or transaction. A relatively large number of short calls from a pay phone usually means someone is attempting to profit from the pay phone compensation fraud scheme.
• If you find something suspicious, talk to your agency's Inspector General (IG). An investigation will take time and may cost a lot, as your IG office may advise you to continue to allow such pay phone calls to facilitate the investigation.
• You can prevent incurring the "dial around compensation" fee if you block ALL calls from pay phone numbers or from the specific geographic locations that are generating these calls. However, blocking calls from all pay phones may prevent legitimate callers from getting the help they need and should only be done as a last resort.

Content Lead: Tonya Beres
Page Reviewed/Updated: September 28, 2011