Legal Articles

FTC Sues VoIP Provider for Illegal Robocalls

Explore the FTC's recent lawsuit against VoIP Provider XCast Labs, Inc., and the warnings issued to other VoIP providers.

3d rendering humanoid robot working with headset and monitor- FTC Sues VoIP Provider for Illegal Robocalls
3d rendering humanoid robot working with headset and monitor

On May 12, 2023, the Federal Trade Commission (FTC) announced a lawsuit filed against VoIP provider XCast Labs, Inc. for allegedly facilitating the transmission of hundreds of millions of illegal robocalls through its network.

From its headquarters in Los Angeles, XCast Labs provides telecommunications services to numerous companies throughout the country, including hosted IP-PBX, SIP trunking, carrier services, and call center solutions. According to the FTC, XCast Labs played a key role in helping telemarketers flood homes with unlawful robocalls, including robocalls impersonating the Social Security Administration.

Repeated Regulatory Infractions by VoIP Provider

As detailed in the Complaint, in January 2020, the FTC sent letters to a number of VoIP providers, including XCast Labs, warning them against assisting and facilitating illegal telemarketing operations. Subsequently, XCast was sent dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding illegal calls that originated on the company’s network, as well as multiple inquiries from law enforcement agencies. Even after receiving these direct warnings, the FTC alleges that XCast Labs continued to transmit illegal robocalls to consumers.

In addition, the FTC claims that many of the suspect robocalls were part of organized campaigns designed to generate telemarketing leads by impersonating federal officials from the Social Security Administration.

The Complaint includes one count of assisting and facilitating violations of the FTC’s Telemarketing Sales Rule and seeks a permanent injunction and monetary civil penalties for every TSR violation.

In announcing the action, Samuel Levine, Director of the FTC’s Bureau of Consumer Protection, stated that, “VoIP providers like XCast Labs that bury their heads in the sand when their customers use their services to break the law can expect to hear from the FTC.”

How VoIP Providers and Telemarketers Can Avoid Potential Lawsuits

If nothing else, this litigation should serve as a stark reminder that any warnings sent by the FTC or the Industry Traceback Group must be taken seriously, and concrete steps must be taken to curb and rectify any highlighted infractions. One thing is certain: VoIP service providers should never turn a blind eye to suspicious traffic on their networks.

The Blacklist Alliance offers a comprehensive array of compliance resources to help marketers and service providers understand their legal obligations under the Telemarketing Sales Rule, and how to mitigate the risk of potential litigation.