United States Settles Suit Against Telecommunications Service Provider for Assisting and Facilitating Illegal Robocalls

Voice over Internet Protocol (VoIP) service provider XCast Labs Inc. (XCast) has agreed to a court order resolving allegations that it violated the Telemarketing Sales Rule (TSR) by assisting and facilitating illegal telemarketing campaigns. The stipulated order, which was entered Tuesday by the U.S. District Court for the Central District of California, prohibits XCast from violating the TSR and has additional provisions to ensure its compliance, including required processes for screening its customers and the calls it transmits to identify potential illegal telemarketing. The order also imposes a $10 million civil penalty judgment, which is suspended based on XCast’s inability to pay.

According to the complaint filed on May 12, XCast provided VoIP services that transmitted billions of illegal robocalls to American consumers, including scam calls fraudulently claiming to be from government agencies. Those robocalls delivered prerecorded marketing messages, and many of them were delivered to numbers listed on the National Do Not Call Registry. Additionally, many of the calls failed to truthfully identify the seller of the services being marketed, falsely claimed affiliations with government entities, contained other false or misleading statements to induce purchases or were transmitted with “spoofed” caller ID information. The complaint alleged that XCast continued to transmit these calls even after being alerted to their illegality.

“Today’s order is another example of the Justice Department’s efforts to protect American consumers from illegal robocalls and to stop telecommunications providers from enabling those calls,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the Federal Trade Commission to enforce the Telemarketing Sales Rule.”

“XCast was warned several times that illegal robocallers were using its services and did nothing,” said Director Samuel Levine of the FTC’s Bureau of Consumer Protection. “Companies that turn a blind eye to illegal robocalling should expect to hear from the FTC.”

Attorneys in the Civil Division’s Consumer Protection Branch, including Trial Attorney Zachary Dietert and Assistant Director Rachael Doud, in conjunction with staff in the FTC’s Division of Marketing Practices, handled the case.

For more information about the Consumer Protection Branch and its enforcement efforts, visit www.justice.gov/civil/consumer-protection-branch. For more information about the FTC, visit www.FTC.gov.