The Federal Trade Commission reached a $10 million settlement with voice-over-internet protocol (VoIP) service provider XCast Labs over allegations the company facilitated hundreds of millions of illegal robocalls on its network after multiple warnings to stop.
On January 2, the Department of Justice filed a proposed court order on behalf of the FTC, which mandates XCast Labs implement a screening process to detect robocall activity and end partnerships with firms that do not comply with telemarketing laws.
The FTC had warned XCast Labs to halt illegal activity on its network since 2020 to no avail.
“XCast was warned several times that illegal robocallers were using its services and did nothing,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Companies that turn a blind eye to illegal robocalling should expect to hear from the FTC.”
This order is another move on the FTC’s part to crack down on illegal telemarketing campaigns. In partnership with the Federal Communications Commission, the agencies launched the Robocall Response Team to tackle the massive influx of robocalls and robotexts, decreasing scam car warranty calls and protection plans by 84%.
In 2020, the FTC sent letters to several VoIP providers, including XCast Labs, alerting the companies that assisting and facilitating illegal telemarketing or robocalling is against the law. XCast Labs accumulated dozens of “traceback” reports from the US Telecom’s Industry Traceback Group, which noted suspected illegal calls originating from XCast Lab’s network.
Law enforcement agencies also inquired about the transmission of suspected illegal traffic on XCast Labs’ network, and the Department of Justice began litigation of the case on behalf of the FTC.
XCast Labs continued to host illegal transmissions on its network, many of which the FTC discovered were part of organized campaigns to generate leads by impersonating officials from the Social Security Administration.
The proposed order, which has been accepted by XCast Labs, prohibits the company from continuing to violate the Telemarketing Sales Rule. It is also banned from assisting and facilitating high-risk customers, such as those “initiating, causing, or transmitting” telemarketing robocalls or calling numbers on the Do Not Call Registry. The company’s network cannot host any telephone using Caller ID spoofing to display a phone number the caller is not authorized to represent, like government agencies.
XCast Labs is permanently barred from providing VoIP services to any company that doesn’t have an automated procedure to block calls displaying invalid Caller ID numbers or those that can’t be authenticated through the FCC’s STIR/SHAKEN Authentication Framework. XCast Labs must screen current and prospective VoIP customers to ensure they aren’t violating laws and immediately cease relations with any that don’t comply.
XCast Labs has agreed to the terms of the order and was issued a $10 million civil penalty.
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