Voice over Internet Protocol (VoIP) provider, XCast Labs, Inc., recently agreed to settle charges levied by the Federal Trade Commission (FTC) that it facilitated hundreds of millions of illegal robocalls through its network. This settlement could have a significant impact on VoIP providers and their operations.
XCast Labs, a nationwide provider of VoIP technology based in Los Angeles, was accused of ignoring multiple warnings about illegal activities conducted through its services. The company’s services enable customers to send and receive phone calls, including robocalls, over the internet, making it an attractive tool for telemarketers who use illegal robocalls.
“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.”
According to the FTC’s complaint, XCast Labs continued to transmit illegal robocalls even after receiving dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspected illegal calls originating from its network. The company also ignored inquiries from law enforcement agencies about the transmission of suspected illegal traffic on its network.
Many of these suspect robocalls were part of organized campaigns to generate telemarketing leads by impersonating officials from the Social Security Administration, according to the FTC.
Under the proposed court order, XCast Labs will be required to implement a screening process and terminate its relationships with firms not complying with telemarketing-related laws. The Department of Justice litigated the case and filed the proposed order on the FTC’s behalf.
The order also permanently bars XCast Labs from providing VoIP services to any company without an automated procedure to block calls displaying invalid Caller ID phone numbers or those not authenticated through the FCC’s STIR/SHAKEN Authentication Framework.
Moreover, XCast Labs is required to pay a $10 million civil penalty, which will be suspended due to its inability to pay. However, if the company is later found to have misrepresented its financial condition, the full amount will immediately become due.
This settlement could set a precedent for VoIP providers, signaling a need for greater scrutiny and vigilance over the activities conducted through their networks. It emphasizes the importance of adhering to telemarketing laws and the potential consequences of non-compliance. As such, VoIP providers may need to bolster their practices to ensure they are not facilitating illegal activities, thereby protecting their operations and reputation.
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