In a recent development, Voice over Internet Protocol (VoIP) service provider XCast Labs Inc. (XCast) has agreed to a court order to settle allegations of violating the Telemarketing Sales Rule (TSR). The U.S. District Court for the Central District of California entered the stipulated order today, prohibiting XCast from violating the TSR and implementing additional measures to ensure compliance.
The court order includes mandatory procedures for screening customers and calls transmitted by XCast to identify potential illegal telemarketing activities. Moreover, a $10 million civil penalty judgment has been imposed, though it is suspended due to XCast's inability to pay.
The complaint, filed on May 12, accused XCast of facilitating illegal telemarketing campaigns through its VoIP services. These campaigns involved transmitting billions of illegal robocalls to American consumers, including fraudulent scam calls claiming to be from government agencies. The robocalls delivered prerecorded marketing messages, with many targeting numbers listed on the National Do Not Call Registry.
The complaint also highlighted that XCast's robocalls failed to truthfully identify the seller of the services being marketed, falsely claimed affiliations with government entities, and contained other false or misleading statements to induce purchases. Additionally, some calls were transmitted with "spoofed" caller ID information. The allegations suggested that XCast continued to transmit these calls despite being aware of their illegality.
Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division, emphasized that the court order reflects the Justice Department's commitment to protecting American consumers from illegal robocalls. The Federal Trade Commission (FTC) also played a role in enforcing the Telemarketing Sales Rule, with Director Samuel Levine of the FTC’s Bureau of Consumer Protection stating that companies ignoring illegal robocalling should expect action from the FTC.
The case was handled by attorneys from the Civil Division’s Consumer Protection Branch, including Trial Attorney Zachary Dietert and Assistant Director Rachael Doud, in collaboration with staff from the FTC’s Division of Marketing Practices.
