February 7, 2023

Volume XIII, Number 38


February 06, 2023

Subscribe to Latest Legal News and Analysis

FTC, DOJ Seek to Enjoin Internet Provider From Facilitating Illegal Robocalls

On April 26, the DOJ filed a federal complaint on behalf of the FTC against a Voice over Internet Protocol (VoIP) service, a related company, and its owner for allegedly facilitating the transmission of illegal telemarketing robocalls.

According to the complaint, the companies and owner assisted in the transmission of millions of robocalls, including calls that they knew or should have known were scams. Specifically, the company provided VoIP services despite knowing that its customers were delivering prerecorded messages and were displaying spoofed caller IDs in various scams, including scams related to the COVID-19 pandemic, tech support, and credit card interest rate reduction. Further allegations include that the company knew its customers were placing calls to numbers on the FTC’s Do Not Call (DNC) Registry. Many of the robocalls originated overseas, and the company also allegedly failed to prevent the calls from reaching American consumers.

Under the FTC’s proposed order to settle the complaint, the company would be required to implement a number of procedures and safeguards to prevent future violations of the FTC’s Telemarketing Sales Rule (TSR) during operations as a VoIP service provider. The provider would be required to:

  • Stop facilitating abusive robocalling and telemarketing practices;

  • Not engage in any future TSR violations, nor assist others in doing so;

  • Terminate business relationships with customers found to be violating the TSR;

  • Enact new procedures to block suspected robocalls; and

  • Screen customers to ensure it is not providing VoIP services to suspected telemarketers and robocallers.

While the order includes a judgment of more than three million dollars, it has been suspended due to the company’s financial status and inability to pay the penalty.

Putting it Into Practice: This is the latest in a string of instances in which the FTC tackles illegal telemarketing through the callers’ VoIP services. This is the FTC’s third case in two years against providers of VoIP services found to be facilitating illegal robocalls—it sued another company in December 2020 for knowingly facilitating robocalls that displayed “911” as the caller ID and dialed calls impersonating the Social Security Administration. In February 2022, two VoIP companies were ordered by California federal courts to turn over information that the FTC sought as part of an investigation into illegal telemarketing practices. The companies initially failed to comply with requests for information contained in civil investigative demands (CIDs) served by the FTC and were forced to comply when the FTC brought them to court. The FTC is aggressively pursuing illegal robocallers, and has demonstrated—again—that it will severely penalize VoIP companies who facilitate these calls and will not tolerate VoIP companies otherwise impeding its investigations.

Copyright © 2023, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 119

About this Author

Moorari Shah Bankruptcy Lawyer Sheppard Mullin Law Firm

Moorari Shah is a partner in the Finance and Bankruptcy Practice Group in the firm's Los Angeles and San Francisco offices. 

Areas of Practice

Moorari combines deep in-house and law firm experience to deliver practical, business-minded legal advice. He represents banks, fintechs, mortgage companies, auto lenders, and other nonbank institutions in transactional, licensing, regulatory compliance, and government enforcement matters covering mergers and acquisitions, consumer and commercial lending, equipment finance and leasing, and supervisory examinations,...

A.J. S. Dhaliwal Bankruptcy Attorney Sheppard Mullin Washington DC

A.J. is an associate in the Finance and Bankruptcy Practice Group in the firm's Washington, D.C. office. 

A.J. has over a decade of experience helping banks, non-bank financial institutions, and other companies providing financial products and services in a wide range of matters including government enforcement actions, civil litigation, regulatory examinations, and internal investigations.

With a diversified regulatory, compliance, and enforcement background, A.J. counsels financial institutions in matters involving...

Katie Daw Government Investigations Attorney Sheppard Mullin Law Firm

Katie’s practice focuses on government investigations into antitrust and competition issues and antitrust litigation.

Prior to joining the firm, Katie completed internships with United States Senator Dianne Feinstein and with United Kingdom Member of Parliament Graham Allen, for whom she conducted nutritional poverty research and drafted initiatives. She also served as a law clerk for the Baltimore Police Department, where she focused on compliance with the city’s consent decree entered into with the Department of Justice.