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On September 21, the FCC adopted rules that would strengthen and modernize the requirements that providers under the Voice over Internet Protocol (VoIP) need to abide by to obtain direct access to telephone numbers. The rules impose guardrails to make it more difficult for those who make illegal robocalls to access telephone numbers, which the FCC stated helps to protect national security and law enforcement, safeguard the nation’s finite numbering resources, reduce the opportunity for regulatory arbitrage, and further promote public safety. The FCC finalized the rules after the FCC sought comment in 2021 under the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act, which directed the FCC to examine its rules regarding direct access to telephone numbers.
The rules require an applicant seeking direct access to telephone numbers to:
- Provide certifications regarding its compliance with FCC robocall rules, FCC interconnected VoIP provider rules, and timely filing of FCC Forms 477 and 499.
- Submit disclosures on and continue to update its ownership structure, including related foreign entities, to reduce the risk that U.S. numbering resources reach bad actors abroad.
- Comply with applicable business-related state laws and registration requirements.
The rules codify the FCC’s role in completing direct access application review and rejection and the authorization revocation process.
Additionally, the rules instruct the North American Numbering Council to study numbering use to inform the FCC’s future rulemaking. The rules also seek comments on a variety of topics, including further reforms on new direct access applications, duties of existing direct access authorization holders, and whether direct access applicants should disclose a list of states where they will provide initial services.
The rules will take effect 30 days after publication in the Federal Register.
On August 1, the FCC’s Enforcement Bureau notified a gateway intermediate provider and originator that it is allegedly transmitting and originating illegal robocalls, which could result in the FCC permitting downstream service providers to block its traffic permanently if it fails to take action. The illegal robocalls allegedly involved attempts to engage with consumers by informing consumers of fake purchase orders or asking them to confirm their order. Noting that the provider is “closely connected” to two other entities that had previously received similar enforcement letters, the FCC warned that continually changing corporate formations and serving those same entities and related principals could constitute “willful attempts to circumvent the law to originate and carry illegal traffic.” Among other things, the provider is required to investigate the identified transmissions, block all of the identified traffic if the investigation confirms that the entity served as the gateway provider for the illegal transmissions, and report the results to the FCC’s enforcement bureau.
On July 18, the FTC, along with over 100 federal and state law enforcement partners nationwide, including the DOJ, FCC, and attorneys general from all 50 states and the District of Columbia, announced a new initiative to combat illegal telemarketing calls, including robocalls. The joint initiative, “Operation Stop Scam Calls,” targets telemarketers and the companies that hire them, lead generators that provide consumers’ telephone numbers to robocallers and others who falsely represent that consumers consented to receive the calls. The initiative also targets Voice over Internet Protocol (VoIP) service providers that facilitate illegal robocalls, many of which originate overseas.
In connection with Operation Stop Scam Calls, the FTC has initiated five new cases against companies and individuals allegedly responsible for distributing or assisting in the distribution of illegal telemarketing calls to consumers across the country. According to the announcement, the actions reiterate the FTC’s position “that third-party lead generation for robocalls is illegal under the Telemarketing Sales Rule (TSR) and that the FTC and its partners are committed to stopping illegal calls by targeting anyone in the telemarketing ecosystem that assists and facilitates these calls, including VoIP service providers.” The announcement also states that more than 180 enforcement actions and other initiatives have been taken by 48 federal and 54 state agencies as part of Operation Stop Scam Calls.
Among the new actions announced a part of Operation Stop Scam Calls is a complaint filed against a “consent farm” lead generator, which allegedly uses “dark patterns” to collect consumers’ broad agreement to provide their personal information and receive robocalls and other marketing solicitations through a single click of a button or checkbox via its websites. Under the terms of the proposed order, the defendant would be required to pay a $2.5 million civil penalty and would be banned from engaging in, assisting, or facilitating robocalls. The defendant would also be required to implement measures to limit its lead generation practices, establish systems for monitoring its own advertising and that of its affiliates, comply with comprehensive disclosure requirements concerning the collection of consumers’ consent to the sale of their information, and delete all previously collected consumer information.
Other actions were taken against a California-based telemarketing lead generator, a telemarketing company that provides soundboard calling services to clients who use robocalls to sell a range of products and services, a New Jersey-based telemarketing outfit that placed tens of millions of calls to consumers whose numbers are listed on the National Do Not Call Registry, and Florida-based defendants accused of assisting and facilitating the transmission of roughly 37.8 million illegal robocalls by providing VoIP services to over 11 foreign telemarketers.
On April 20, the Washington governor signed HB 1051 to expand existing provisions regulating robocalls and telephone solicitations and prohibit abusive telephone communications that mislead or harm state residents. In doing so, the Act extends liability to “persons who provide substantial assistance or support in the origination and transmission of robocalls” that violate state law, and prohibits the initiation of unwanted calls to phone numbers listed on the National Do Not Call Registry pursuant to the Telemarketing Sales Rule. Among other things, practices that violate the Act’s provisions will be considered an unfair or deceptive act in trade or commerce and an unfair method of competition for purposes of applying the state’s consumer protection act. Injured persons may bring a civil action in Washington superior court to prevent further violations and “shall recover actual damages or $1,000 per violation of this section, whichever is greater.” The Act is effective July 23.
On April 11, the FTC implemented Project Point of No Entry (PoNE) in an attempt to stop foreign-based scammers and imposters from targeting U.S. consumers with illegal robocalls. The FTC warned “point of entry” or “gateway” VoIP service providers that routing or transmitting illegal call traffic may violate the Telemarketing Sales Rule, which allows the Commission to seek civil penalties, restitution, and injunctions to stop violations. Through Project PoNE, the FTC will identify violators and “pursue recalcitrant providers” by opening enforcement investigations and filing lawsuits, as appropriate. According to the FTC, “Project PoNE has uncovered the activity of 24 target point of entry service providers responsible for routing and transmitting illegal robocalls between 2021 and 2023, in connection with approximately 307 telemarketing campaigns, including government and business imposters, COVID-19 relief payment scams, and student loan debt relief and forgiveness schemes, among others.” The FTC attributed the results to its collaboration with the Industry Traceback Group, the FCC, and state attorneys general, and said it will make publicly available recordings of the robocalls that target providers have allowed into the U.S. to help consumers identify and avoid scams. The announcement highlighted that before being contacted by the FTC, “the targets had a combined total of 1,043 tracebacks,” but that after being warned about the possible illegal conduct, the number decreased to 196 tracebacks. Of these 196 tracebacks, the FTC said “147 are linked to two uncooperative providers, one of which is subject to an FCC law enforcement action.”
On March 6, the U.S. District Court for the Southern District of Texas entered stipulated orders and permanent injunctions against two individuals who, along with their companies (also named as defendants in the litigation), allegedly operated a massive robocall campaign to sell extended car warranties and health care services. (See orders here and here.) Eight states attorneys general alleged violations of the TCPA and the Telemarketing Sales Rule, as well as various state consumer protection laws, claiming that the defendants initiated millions of robocalls to individuals nationwide without their prior express consent, spoofed caller ID numbers to mislead recipients, and called people whose numbers were on the Do Not Call Registry. Under the terms of the orders, the individual defendants (who neither admitted nor denied the allegations) are permanently banned from initiating or facilitating (or causing others to initiate or facilitate) any robocalls, working in or with companies that make robocalls, or engaging in any telemarketing. The court also ordered each individual defendant to pay a $122.3 million monetary judgment; however, these payments are mostly suspended in favor of the more permanent bans due to their inability to pay. The states noted that they are continuing their cases in the same action against others who allegedly worked with the individual defendants to facilitate the robocalls.
On February 16, the DOJ filed a complaint on behalf of the FTC against several corporate and individual defendants for alleged violations of the FTC Act and the Telemarketing Sales Rule (TSR) in connection with debt relief telemarketing campaigns that delivered millions of unwanted robocalls to consumers. (See also FTC press release here.) According to the complaint, filed in the U.S. District Court for the Southern District of California, the defendants are interconnected platform providers, lead generators, telemarketers, and debt relief service sellers. Alleged violations include: (i) making misrepresentations about their debt relief services; (ii) initiating telemarketing calls to numbers on the FTC’s Do Not Call Registry, as well as calls in which telemarketers failed to disclose the identity of the seller and services being offered; (iii) initiating illegal robocalls without first obtaining consent; (iv) failing to make oral disclosures required by the TSR, including clearly and truthfully identifying the seller of the debt relief services; (v) misrepresenting material aspects of their debt relief services; and (vi) requesting and receiving payments from customers before renegotiating or otherwise altering the terms of those customers’ debts. The complaint seeks permanent injunctive relief, civil penalties, and monetary damages. Two of the defendants (a debt relief lead generator and its owner) have agreed to a stipulated order that, if approved, would prohibit them from further violations and impose a monetary judgment of $3.38 million, partially suspended to $7,500 to go towards consumer redress due to their inability to pay.
On January 24, the FCC’s Enforcement Bureau announced it had ordered telecommunications companies to effectively mitigate robocall traffic originating from a Florida-based real estate brokerage firm selling mortgage scams. The FCC also sent a cease-and-desist letter to a voice service provider carrying the allegedly illegal robocall traffic. According to the FCC, several state attorneys general filed lawsuits late last year against the firm for allegedly using “misleading robocalls to ‘swindle’ and ‘scam’ residents into mortgaging their homes in exchange for small cash payments.” (See state AG press releases here, here, and here.) Additionally, last month, Senate Banking Committee Chairman Sherrod Brown (D-OH), along with Senators Tina Smith (D-MN) and Ron Wyden (D-OR) sent a letter to the FTC and the CFPB requesting a review of the firm’s use of exclusive 40-year listing agreements marketed as a “loan alternative.” (Covered by InfoBytes here.) In shutting down the robocalls, FCC Chairwoman Jessica Rosenworcel stressed that sending junk calls to financially-stressed homeowners in order to offer “deceptive products and services is unconscionable.” Enforcement Bureau Chief Loyaan A. Egal added that the voice service provider should have been applying “Know Your Customer” principles before allowing the traffic on its networks.
In December, FCC Chair Jessica Rosenworcel sent a letter to twelve senators in response to their June 2022 letter inquiring about combating robocalls. In the letter, Rosenworcel highlighted the FCC’s efforts to combat robocalls by discussing the agency’s “important” proposed rules, adopted in May, to ensure gateway providers that channel international call traffic comply with STIR/SHAKEN caller ID authentication protocols and validate the identity of the providers whose traffic they are routing to help weed out robocalls (covered by InfoBytes here). She also highlighted the FCC’s enforcement efforts, such as a December action where the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations—“largest robocall operation the FCC has ever investigated” (covered by InfoBytes here).
Rosenworcel requested additional authority from Congress to combat robocalls and robotexts more effectively. Specifically, Rosenworcel asked the senators to “fix the definition of autodialer” – since robotexts are neither prerecorded nor artificial voice calls, the TCPA only provides consumers protection from robotexts if they are sent from autodialers. She further noted that the Supreme Court's decision in Facebook v. Duguid (covered by a Buckley Special Alert) narrowed the definition of autodialer under the TCPA, resulting in the law only covering equipment that generates numbers randomly and sequentially. She wrote that as a result, “equipment that simply uses lists to generate robotexts means that fewer robotexts may be subject to TCPA protections, and as a result, this decision may be responsible for the rise in robotexts.” Among other things, she also requested that Congress update the TCPA to permit for administrative subpoenas for all types of non-content customer records, and for Congress to grant the FCC the authority and resources to increase court enforcement of fines.
On December 21, the FCC announced a nearly $300 million fine against an auto warranty scam robocall campaign for TCPA and Truth in Caller ID Act violations, “which is the largest robocall operation the FCC has ever investigated.” According to the announcement, the two individuals in charge of the operation ran a complex robocall sales lead generation scheme, which was designed to sell vehicle service contracts that were deceptively marketed as car warranties. This “scheme made more than 5 billion robocalls to more than half a billion phone numbers during a three-month span in 2021, using pre-recorded voice calls to press consumers to speak to a ‘warranty specialist’ about extending or reinstating their car’s warranty.” As previously covered by InfoBytes, in July, the FCC took initial action by ordering “phone companies to stop carrying traffic regarding a known robocall scam marketing auto warranties.” The FCC noted that the operation is also the target of an ongoing investigation by the FCC’s Enforcement Bureau and a lawsuit by the Ohio attorney general. The Ohio AG filed a complaint against multiple companies for participating in an alleged unwanted car warranty call operation (covered by InfoBytes here). The complaint, filed in the U.S. District Court for the Southern District of Ohio, alleged that the 22 named defendants “participated in an unlawful robocall operation that bombarded American consumers with billions of robocalls.” In addition to the fine, among other things, the individuals who allegedly ran the operations are prohibited from making telemarketing calls pursuant to FCC actions.