The U.S. Department of Justice (DoJ) said on Tuesday it had reached a settlement with VoIP service provider XCast, accusing XCast of violating the Telemarketing Rules (TSR) by facilitating illegal telemarketing activities since at least January 2018.
In addition to prohibiting the company from breaking the law, the stipulated order also requires it to take other compliance measures, including establishing a process for screening customers and calling out potentially illegal telemarketing calls. The order also imposed a $10 million civil penalty, which has been suspended due to XCast’s inability to pay.
“The VoIP service provided by XCast transmitted billions of illegal autodialed calls to U.S. consumers, including scam calls impersonating government agencies,” the U.S. Department of Justice said in a press release.
The calls delivered prerecorded marketing messages, most of which were sent to numbers listed on the National Do-Not-Call Registry. To make matters worse, most calls falsely claim to be affiliated with a government entity or contain outright false or misleading messages in an attempt to trick victims into making a purchase.
For example, some calls claimed to be from the Social Security Administration and threatened to cut off the recipient’s utility service unless payment was made immediately. In other cases, consumers are urged to take immediate action to reverse false credit card charges.
As part of the proposed settlement, XCast has been ordered to cut ties with companies that don’t comply with U.S. telemarketing laws.
The Los Angeles-based company took no action despite repeated warnings that illegal robocallers were using its services, the FTC said in a statement.
“This order permanently prohibits XCast Labs from providing VoIP services to any company that does not have automated procedures to block calls that display invalid caller ID phone numbers or that are not authenticated through the FCC’s STIR/SHAKEN authentication framework,” the FTC said.
This development comes as the Federal Trade Commission announced that Response Tree is prohibited from making or assisting anyone else in making robocalls or calling numbers on the Do Not Call Registry.
The indictment accuses the California company of operating more than 50 websites, such as PatriotRefi[.]com, home defense[.]com and TheRetailRewards[.]com, which uses manipulative dark patterns to “trick consumers into providing personal information to obtain purported mortgage refinance loans and other services.”
The defendants allegedly then sold the collected information on hundreds of thousands of consumers to telemarketers, who used the information to make millions of illegal telemarketing calls, including robocalls, to consumers across the country.
