LA VoIP Provider Sued By FTC For Billions of Illegal Telemarketing Robocalls

The Federal Trade Commission (FTC), the agency that protects America’s consumers has turned its attention to Los-Angeles-based XCast Labs, a Voice over Internet Protocol (VoIP) provider for allegedly allowing billions of robocalls on its network over the past five years, thus breaking oodles of United States regulations.

In the lawsuit, the regulator argues that XCast aided telemarketing scams in addition to calling numbers on the National Do Not Call Registry while turning a blind eye to numerous warnings over the years.

The regulator outlined in the 13-page lawsuit that the calls carried on undeterred and in utter disregard to America’s Telemarketing Sales Rule (TSR) filed on May 12 in a California federal court.

Among the demands the FTC made to the court are for XCast to cease with immediate effect all malpractices and agree to pay an unspecified amount in penalties.

XCast Under Fire for Aiding Billions of Robocalls into American Homes

The Department of Justice (DoJ), the agency that filed the lawsuit following a request by the FTC alleged that XCast Labs has since at least 2018 transmitted telemarketers’ robocalls to American people amid its wide range of services including, call management and a feature for blocking robocalls.

The list of allegations includes aiding scams, transmitting robocalls to numbers on the Do Not Call Registry, and delivering pre-recorded messages to consumers that did not identify the seller but made fraudulent claims aimed at persuading customers to buy products or make different donations.

According to the FTC, the calls spanning five years, deceived consumers with false caller ID numbers, not to mention falsely claiming affiliations with certain groups that include not less than one campaign that claimed its origin from a federal agency.

“XCast Labs played a key role in helping telemarketers flood homes with unlawful robocalls, including robocalls impersonating the Social Security Administration,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “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.”

The Robocalls Problem Plaguing US Consumers

Consumers in the US continue to be bombarded by robocalls and, increasingly, robotexts. According to call-blocking company RoboKiller, approximately 5.16 billion robocalls were made in the United States in April alone.

While this represents a decrease from the 12-month peak of 7.5 billion in August 2022, it remains a substantial and concerning figure.

Federal Communications Commission (FCC) under the Biden-Harris administration has taken vigorous steps to tackle this problem, including evaluating network operators’ ability to block robocalls.

In December, the FCC sought the court’s help to obtain $300 million in fines from Cox/Jones Enterprise after the company conducted an extensive warranty sales campaign that resulted in nearly 5.2 billion robocalls being sent to mobile and landline phones over a three-month period in 2021.

Writing in their May complaint, the FTC said that telemarketers “typically use VoIP service providers to transmit those calls.”

“Multiple VoIP providers often participate in transmitting a given call from its originator (often a telemarketer) to a termination point (most often a consumer’s telephone),” the agency explained.

The FTC claims that XCast Labs had its signature on every stage of the robocalls’ stages which the agency highlights as initial services – thus picking the call at the start of transmission from the telemarketer or company to the mid-stream stage – which the agency refers to as transmitting the initiated calls to or from other providers of VoIP.

Warning XCast Amounted To Nothing

According to the case files the FTC informed XCast of its hand in aiding robocalls. The warning sent in January 2020 was directed at several VoIP providers, XCast included.

Besides, XCast had been subpoenaed in 2019 following records of calls connected to an Indian VoIP provider. The company also received a demand letter from the FTC in 2021 requesting data on other customers.

Other state agencies are reported to have sent notices and warnings to XCast.

Moreover, the Industry Traceback Group (ITG) of US Telecom – a consortium of phone and broadband companies – has been alerted XCast on the issue of questionable calls since December 2018, at the very least.

These alerts were sent through “traceback requests,” a method used by the ITG to collaborate with service providers in pinpointing the origin of suspicious traffic on their networks.

Did XCast Know Exactly What It Was Doing?

The FTC argues that XCast was not only complacent about what was happening through its network, but it also ignored numerous regulatory warnings and sustained its relationship with the flagged telemarketers.

Using the company’s call data records (CDRs), the FTC was able to obtain the information it needed including details on the date and time the calls were made, the exact identity of the numbers the calls came from, and their destination in addition to the duration of the calls.

Information obtained from XCast’s CDRs revealed that of all the calls it enabled from three of its customers, nearly two billion were directed to numbers on the National Do Not Call Registry.

The FTC also found out that “XCast’s CDRs are also rife with massive volumes of very short duration calls, which are a distinct feature of fraudulent robocall campaigns,” alleging that the duration for the two billion calls averaged about 6.5 seconds.

Doubling down on VoIP’s involvement in billions of robocalls, the FTC alleged in the lawsuit that “XCast knew or consciously avoided knowing that providers were using XCast’s services to transmit calls that violated the TSR.”

In one of the statements in the case file, the regulators reckoned that due to XCast Labs’ actions “consumers are suffering, have suffered, and will continue to suffer substantial injury as a result of Defendant’s violations of the TSR” unless the courts intervene.

XCast Labs, a company based in Los Angeles, California, is a well-known provider of VoIP technology across the country. Their services enable users to make and receive phone calls, including robocalls (which are pre-recorded messages), via the Internet.

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