Null and VoIP: FTC reminds service providers of the letter of the law

We usually wouldn’t suggest you read someone else’s mail, but FTC staff just sent letters to 19 providers of VoIP telephone services and the underlying message about the breadth of liability for consumer protection violations is relevant to other businesses.

In many contexts, VoIP offers substantial benefits to consumers. But when it comes to robocalls and deceptive telemarketing pitches, VoIP can be a fraudster’s best friend. That’s because the technology allows scammers to blast out millions of illegal calls for very little money.

Last month the FTC and Ohio Attorney General amended a pending lawsuit to name as a defendant VoIP service provider Globex, alleging it provided a company called Educare with the means to unleash an onslaught of illegal calls pitching bogus credit card interest rate reduction services. The FTC and AG say that Globex assisted and facilitated Educare’s underlying scheme, in violation of the FTC Act, the Telemarketing Sales Rule, and Ohio law.

Although it’s the first time the FTC has brought claims like this against a VoIP service provider, it’s not a novel theory. The FTC has a long history of taking action against companies that grease the wheels for law breakers. For example, in 2018 the agency brought assisting and facilitating charges against technology companies that knowingly provided software and servers used by illegal robocallers, even though the companies didn’t contract directly with them.

The case against Globex is ongoing, but a federal district court has already ruled against the defendants’ argument that the FTC lacks jurisdiction over VoIP. In addition to informing VoIP providers about the Globex action, FTC staff wants them to be aware of two other important points:

• the FTC Act’s broad prohibition on unfair and deceptive practices; and
• Section 310.3(b) of the Telemarketing Sales Rule, which specifically prohibits “provid[ing] substantial assistance or support to a seller or telemarketer when that person or entity knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice” that violates key provisions of the TSR. Examples include transmitting false Caller ID information, calling numbers on the National Do Not Call Registry, or robocalling consumers without their express written permission.

The letters to VoIP providers (and the FTC’s Complying with the Telemarketing Sales Rule) are long on specifics, citing key TSR provisions chapter and verse. But there is also an unmistakable big-picture point that extends far beyond VoIP: Assisting others’ law violations can have substantial legal and financial consequences.