Business ProfileforXCast Labs, Inc

FTC vs XCast Labs, Inc
Voice over Internet Protocol (VoIP) provider XCast Labs, Inc., agreed to settle Federal Trade Commission charges that it funneled hundreds of millions of illegal robocalls through its network, even after receiving multiple warnings about the unlawful conduct.

Under the proposed court order, XCast Labs will be required to implement a screening process and end its relationships with firms that are not complying with telemarketing-related laws. The Department of Justice litigated the case and filed the proposed order on the FTC’s behalf.

“XCast was warned several times that illegal robocallers were using its services and did nothing,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that turn a blind eye to illegal robocalling should expect to hear from the FTC.”

“Today’s order is another example of the Justice Department’s efforts to protect American consumers from illegal robocalls and to stop telecommunications providers from enabling those calls,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the Federal Trade Commission to enforce the Telemarketing Sales Rule.”

XCast Labs, headquartered in Los Angeles, is a nationwide provider of VoIP technology, providing services that allow its customers to send and receive phone calls, including robocalls, over the internet. Telemarketers who blast illegal robocalls typically use VoIP service providers like XCast Labs to transmit their calls.

According to the May 2023 complaint, the FTC sent letters to several VoIP providers, including XCast Labs, in early 2020 warning them that assisting and facilitating illegal telemarketing or robocalling is against the law. XCast Labs received dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspected illegal calls that originated on XCast Labs’ network, as well as inquiries from law enforcement agencies about transmission of suspected illegal traffic on the XCast Labs network.

Even after receiving these direct warnings, XCast Labs transmitted illegal robocalls to consumers. The FTC also discovered that many of these suspect robocalls were part of organized campaigns to generate telemarketing leads by impersonating officials from the Social Security Administration.

The proposed order, to which XCast Labs has agreed, prohibits the company from violating the Telemarketing Sales Rule in the future. It also bans XCast Labs from assisting and facilitating any high-risk customer, including those that are engaged in initiating, causing, or transmitting telemarketing robocalls or calling numbers on the DNC Registry and any telephone call using Caller ID spoofing to display a phone number that the calling party does not have the legal authority to use.

Next, 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. Further, the order requires XCast Labs to screen current and prospective VoIP customers to ensure they are not violating telemarking-related laws and terminate relationships with any customer that does not pass the screening process.

Additionally, the order requires XCast Labs to pay a $10 million civil penalty, which will be suspended based on its inability to pay. If the company is later found to have misrepresented its financial condition, the full amount will immediately become due.

XCast Labs, Inc vs FTC

The Federal Trade Commission sued to stop a Voice over Internet Protocol (VoIP) provider, XCast Labs, Inc., that continued to funnel hundreds of millions of illegal robocalls through its network, even after receiving multiple warnings. The Department of Justice filed the complaint in the Central District of California on the FTC’s behalf.

“XCast Labs played a key role in helping telemarketers flood homes with unlawful robocalls, including robocalls impersonating the Social Security Administration,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “VoIP providers like XCast Labs that bury their heads in the sand when their customers use their services to break the law can expect to hear from the FTC.”      

XCast Labs, headquartered in Los Angeles, California, is a nationwide provider of VoIP technology, providing services that allow its customers to send and receive phone calls, including robocalls (calls that play a prerecorded message), over the Internet. Telemarketers who blast illegal robocalls typically use VoIP service providers like XCast Labs to transmit their calls.

According to the complaint, in January 2020, the FTC sent letters to a number of VoIP providers, including XCast Labs, warning them that assisting and facilitating illegal telemarketing or robocalling was against the law. The complaint also alleges that XCast Labs received dozens of “traceback” inquiries from US Telecom’s Industry Traceback Group regarding suspected illegal calls that originated on XCast Labs’ network, as well as inquiries from law enforcement agencies about transmission of suspected illegal traffic on the XCast Labs network. Even after receiving these direct warnings, the FTC alleges that XCast Labs transmitted illegal robocalls to consumers.

In addition, the FTC discovered that many of these suspect robocalls were part of organized campaigns designed to generate telemarketing leads by, for example, impersonating federal officials from the Social Security Administration. Lead generators sell the information they gather to telemarketers, who then use consumers’ information to pester them with even more unwanted, illegal calls.