DOJ Slams XCast with $10 Million Fine Over Massive Illegal Robocall Operation

VoIP Service / Regulatory Compliance

The U.S. Department of Justice (DoJ) on Tuesday said it reached a settlement with VoIP service provider XCast over allegations that it facilitated illegal telemarketing campaigns since at least January 2018, in contravention of the Telemarketing Sales Rule (TSR).

In addition to prohibiting the company from violating the law, the stipulated order requires it to meet other compliance measures, including establishing a process for screening its customers and calling for potential illegal telemarketing. The order, which also imposes a $10 million civil penalty judgment, has been suspended due to XCast’s inability to pay.

“XCast provided VoIP services that transmitted billions of illegal robocalls to American consumers, including scam calls fraudulently claiming to be from government agencies,” the DoJ said in a press release.

These calls delivered prerecorded marketing messages, most of which were sent to numbers listed on the National Do Not Call Registry. To make matters worse, a majority of the calls falsely claimed to be affiliated with government entities or contained outright false or misleading information in an attempt to deceive victims into making purchases.

For instance, some of the calls claimed to be from the Social Security Administration and threatened to cut off a recipient’s utility service unless immediate payments were made. In other cases, consumers were urged to act promptly to reverse bogus credit card charges.

As part of the proposed settlement, XCast has been ordered to cut ties with firms that do not adhere to the U.S. telemarketing laws.

The U.S. Federal Trade Commission (FTC), in a statement, said the Los Angeles-based company did nothing despite being warned several times that illegal robocallers were using its services.

“The order permanently bars XCast Labs from providing VoIP services to any company with which it does not have an automated procedure 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.

The development comes as the FTC announced a ban on Response Tree from making or assisting anyone else in making robocalls or calls to phone numbers on the Do Not Call Registry.

The complaint accused the Californian company of operating more than 50 websites, such as PatriotRefi[.]com, AbodeDefense[.]com, and TheRetailRewards[.]com, which used manipulative dark patterns to “trick consumers into providing their personal information for supposed mortgage refinancing loans and other services.”

The defendants then allegedly sold the collected information of hundreds of thousands of consumers to telemarketers who used them to make millions of illegal telemarketing calls, including robocalls, to consumers across the country.

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