FTC Sues VoIP Service Provider for Allegedly Aiding and Abetting Illegal Telemarketing Robocalls

Just last week, Federal Trade Commission (FTC) sued XCast Labs, Inc., a Voice over Internet Protocol (VoIP) provider, for its alleged involvement in facilitating illegal robocalls. Despite receiving multiple warnings, the company continued to allow hundreds of millions of these unlawful calls to flow through its network. The complaint, filed on May 12, 2023 by the Department of Justice in the Central District of California on behalf of the FTC, seeks to put an end to XCast Labs’ activities.

It is important to note that when the FTC has “reason to believe” that named defendants are or will be violating the law and that a proceeding is in the public interest, a complaint for civil penalties is referred to the DOJ for filing. 

The FTC emphasized the significant role played by XCast Labs in inundating households with illegal robocalls, including those impersonating the Social Security Administration. In the past, the FTC issued public warnings that it would hold VoIP providers accountable if they turned a blind eye to their customers’ illegal activities.

According to the complaint, based in Los Angeles, California, XCast Labs operates as a nationwide VoIP technology provider, offering services that enable customers to make and receive phone calls over the Internet, including robocalls—pre-recorded messages delivered through automated systems. Furthermore, the FTC alleges that unscrupulous telemarketers often employ VoIP service providers to transmit their illicit robocalls.

The FTC’s complaint reveals that in January 2020, warning letters were sent to several VoIP providers, including XCast Labs, cautioning them against aiding and abetting illegal telemarketing and robocalling activities. Additionally, the complaint alleges that XCast Labs received numerous “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspicious calls originating from its network. Furthermore, law enforcement agencies approached XCast Labs regarding the transmission of potentially illegal traffic. Despite these direct warnings, the FTC asserts that XCast Labs continued to transmit illegal robocalls to consumers.

This recent FTC action is a clear indication that the FTC will hold or plans to hold VoIP providers accountable for failing to properly stop robocalls made by their clients in violation of federal and state laws.