Oftel warns BT to waive hacking bills

British Telecom has been accused by the telecoms regulator, Oftel, of breaking its licence, because it has let some victims of telephone fraud off their bills while demanding payment in full from others.

BT has only given this preferential treatment to companies that have bought the BT Meridian switchboard - described by one telephone hacker as being as secure as "a car which has no locks and just a switch for the ignition".

Telephone hackers can reprogramme facilities in computerised switchboards over the phone, letting them make calls to any number in the world, for any length of time. The bills go on to the company's account. The Meridian switchboard was especially easy to reprogramme because its four-digit codes could be guessed easily.

BT became abruptly aware of the flaws in the system last year when a number of companies discovered hackers using their system. One company with almost 50 external phone lines found that every one was busy at 4am as hackers exploited its weaknesses.

BT is understood to have subsequently waived bills run up by telephone hackers in at least four organisations, including an oil company based near London, a national computer recruitment agency, the British arm of an American entertainment corporation, and a large Scottish company. All used the Meridian switchboard. But BT has refused to waive a pounds 20,000 bill caused by hacking at Technocom, based in Slough, which uses a switchboard bought from a different company.

Oftel has now told BT it should grant a similar waiver to Technocom. In a letter to Technocom it says: "Not to do so would put BT in breach of its licence condition on undue discrimination." But BT insists that the waivers were "a mistake" and that its standard policy is to enforce payment of bills. It is contesting Oftel's decision.

David Guthrie, managing director of Technocom, said yesterday: "BT is giving credit to these people who bought Meridian, and that's unfair. The money they give to them could go to reducing everyone else's bills. "

He added: "I think that they gave a couple of people this waiver and that when more came along they realised they had opened Pandora's Box." However, BT insists that its policy has not changed.

Mr Guthrie wrote to Oftel earlier this year. In November and December last year his company's switchboard was used by hackers, who rang in on freephone numbers and reprogrammed the switchboard so that they could call other companies, in order to cover their tracks, or make international calls at the company's expense. In a matter of weeks they ran up bills of more than pounds 20,000.

A manager at one of the other companies whose Meridian switchboard was hacked into told the Independent: "BT never told us that the switchboard could be hacked so easily ... It's the sort of thing you would remember."