Thinking about ignoring a CID? Think again.

Protecting consumers from illegal robocalls is a battle the FTC is waging on all fronts. Two recent actions to enforce Civil Investigative Demands (CIDs) issued to VoIP service providers demonstrate that commitment. But the message of those cases extends beyond the robocall arena.

Voice over Internet Protocol – VoIP – service providers facilitate the transmission of phone calls over the Internet. As the FTC has learned from other investigations, billions of calls that pass through VoIP service providers each year are illegal telemarketing calls and robocalls, many of which originate from outside the United States, but target American consumers. In the course of investigating violations of the Telemarketing Sales Rule and other provisions, the FTC frequently issues CIDs to VoIP service providers that carry potentially illegal calls. Our goal is to collect information necessary to enforce the law, including what they’re doing to comply with the TSR and the identity of the telemarketer placing the potentially illegal calls.

The FTC issued a CID to Los Angeles-based VoIP service provider XCast Labs, but received only a fraction of responsive information. When efforts to work cooperatively with XCast were unsuccessful, the FTC went to court to enforce the CID. A federal judge has ordered the company to comply.

In a separate action, the FTC sent a CID to Deltracon, a VoIP service provider based in Irvine, California. Deltracon and its principals failed to respond, so the FTC asked a federal court to compel compliance, urging that the company’s actions had “materially impeded the FTC’s investigation.” The court granted the FTC’s petition and Deltracon finally turned over required information.

What can other companies take from the two recent actions?

The FTC means business when it sends a business (or anyone else) a CID. The agency makes law enforcement decisions based on facts, which is why CIDs are essential to the investigative process. It’s exceedingly unwise for a company to ignore a CID or to respond in an incomplete fashion. When necessary, the FTC will move quickly to use available tools to seek enforcement.

Underscore and italicize that message when it comes to illegal robocalls. The Telemarketing Sales Rule imposes broad liability on the companies behind illegal robocalls and the outfits that lend them a hand. Exhibit A: The FTC’s action against Alcazar Networks and its owner, charging them with facilitating illegal telemarketing calls by – among other things – knowingly providing VoIP services to a company from India that fraudulently displayed 911 as the caller ID and dialed calls impersonating the Social Security Administration. The settlement in that case permanently bans the defendants from many aspects of the telemarketing business.