FCC Proposes $225M Fine for Spoofed Robocalls

Continuing its campaign against illegal robocalls, particularly the spoofed variety, the Federal Communications Commission (FCC) on June 9, 2020, proposed a $225 million fine – the “largest in the FCC’s 86-year history” – against Texas-based health insurance telemarketers for apparently making approximately 1 billion illegally spoofed robocalls.

The FCC accuses “John C. Spiller and Jakob A. Mears, who used business names including Rising Eagle and JSquared Telecom” in connection with Rising Eagle making “approximately 1 billion spoofed robocalls across the country during the first four-and-a-half months of 2019 on behalf of clients that sell short-term, limited-duration health insurance plans.”

In its lengthy and detailed Notice of Proposed Liability For Forfeiture (NALF) the agency outlines how the “The robocalls falsely claimed to offer health insurance plans from well-known health insurance companies such as Aetna, Blue Cross Blue Shield, Cigna, and UnitedHealth Group“. According to the FCC’s investigation, which was assisted by the USTelecom Industry Traceback Group, a consumer who indicated an interest in speaking with a representative of one of those companies was “transferred to a call center with no affiliation to the named companies, where call center representatives then would attempt to convince the consumer to purchase an insurance product sold by one of Rising Eagle’s clients.”

Further, as a result of the spoofing, which the NALF asserts violated the Truth In Caller ID Act component of the Telephone Consumer Protection Act (TCPA), the FCC found that the calls “targeted millions of Do Not Call list participants, and were received on many wireless phones without prior consumer consent.” Moreover, “the scam also caused the companies whose caller IDs were spoofed to become overwhelmed with angry call-backs from aggrieved consumers. At least one company was hit with several lawsuits because its number was spoofed, and another was so overwhelmed with calls that its telephone network became unusable.”

As TCPAWorld reported a while back, the Department of Justice is now pursuing quasi-criminal injunctive relief proceedings against U.S. based phone carriers that are allegedly serving as gateways for fraudulent robocall traffic. This is a new tactic in the ongoing war on fraudulent robocalls in this nation, and one that treats phone carriers as potential aiders and abettors of fraudulent traffic on their networks—a real departure from the traditional immunity enjoyed by so-called common carriers. Indeed, for decades phone carriers were prohibited from making assessments about the desirability of calls under federal law. Well, no more.

In United States v. Palumbo, 20-cv-0473 (EK) (RLM), 2020 U.S. Dist. LEXIS 61466 (E.D.N.Y. March 24, 2020) a federal district court issued a preliminary injunction against so-called intermediary carriers TollFreeDeals and SIP Retail requiring, in essence, that these companies cease operations because they are “key participants in a large, ongoing telecommunications fraud.” And depending on your point of view this is either an excellent win in the fight against scam calls, or an order that throws the baby out with the bath water and threatens to shut down small legitimate carriers based upon third-party reports of potentially fraudulent calls traversing their networks.

Hold onto your hats folks, this one is cutting edge and just fascinating.

Defendants in Palumbo are/were phone carriers that carry telecommunications traffic and sell return phone numbers (so called DIDs) to customers in exchange for a fee. In a vacuum, this conduct is no different than what numerous (all?) other phone carriers do across the nation. The problem for these Defendants, however, is that the folks using their networks and phone numbers were engaging in highly-illegal conduct—scam robocalls.

The Department of Justice recently announced that the U.S. District Court for the Eastern District of New York has entered orders in two separate civil actions, barring eight individuals and entities from allegedly continuing to facilitate the transmission of large volumes of fraudulent robocalls to consumers in the United States.

In one of the matters, United States v. Nicholas Palumbo, et al., the District Court entered a preliminary injunction that bars two individuals and two entities from operating as intermediate voice-over-internet-protocol (VoIP) carriers during the pendency of the civil action.  In the other matter, United States v. John Kahen, et al., the District Court entered consent decrees that permanently bar an individual and three entities from operating as intermediate VoIP carriers conveying any telephone calls into the U.S. telephone system.

“These massive robocall fraud schemes target telephones of residents across our country, many of whom are elderly or are otherwise potentially vulnerable to such schemes,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The department is committed to stopping this unlawful conduct and pursuing those who knowingly facilitate these schemes for their own financial gain.”

“This office will take all appropriate measures to stop fraudulent robocalling schemes responsible for causing catastrophic losses to victims, including seeking to permanently shut down the U.S.-based enablers of such schemes,” said United States Attorney Richard P. Donoghue for the Eastern District of New York.  “Protecting elderly and vulnerable individuals from being conned by foreign call center scammers remains a priority of this office and the Department of Justice.”

The complaints alleged that the defendants in both cases operated as VoIP carriers, receiving internet-based calls from other entities, often located abroad, and transmitting those calls first to other carriers within the United States and, ultimately, to the phones of individuals. 

Numerous foreign-based call centers are alleged to have used the defendants’ VoIP carrier services to pass fraudulent government- and business-imposter robocalls to victims in the United States. 

The defendants also allegedly sold U.S. phone numbers to foreign entities, which were used as victim call-back numbers as part of massive robocalling fraud schemes.

As also alleged in the complaints, the defendants were warned numerous times that they were carrying fraudulent robocalls, including calls impersonating government agencies, such as the Social Security Administration, the IRS, and legitimate businesses, such as Microsoft.  The complaints allege that the defendants continued to carry those calls and facilitate fraud schemes targeting individuals in the United States. 

After Addressing Concerns from Stakeholders, FCC Adopts Revised Declaratory Ruling and Third Further Notice on Default Call Blocking

It’s been a busy month on the robocall front! Since our last monthly digest, the FCC circulated a draft and later adopted a final version of a Declaratory Ruling and Third Further Notice of Proposed Rulemaking addressing robocall blocking. In the Declaratory Ruling, the FCC clarified that voice service providers may offer default call blocking to their customers, so long as their customers are informed and have the opportunity to opt-out of the blocking…

On June 6, 2019, the Federal Communications Commission will vote on the most aggressive steps to date to prevent consumers from receiving unwanted and disruptive robocalls. The Telephone Consumer Protection Act and the FCC’s rules impose limits on the use of automated telemarketing calls and subject entities making such calls in violation of those limitations to government-imposed sanctions (including monetary fines) and to civil litigation. Notwithstanding those rules and the threat of sanctions and class action lawsuits, robocalls persist and remain the number one source of consumer complaints to the FCC…

Source:https://bit.ly/2ZcCC5n

The US Senate today approved the TRACED Act, S. 151, as reported by the Senate Committee on Commerce, Science and Transportation, by a vote of 97-1. Only Senator Rand Paul (R-KY) voted against the bill. Senate floor action came after the Commerce Committee filed its report on the bill, S. Rep. No 116-41. As previously noted, the TRACED Act would increase potential fines for illegal robocalls, extend the statute of limitations for prosecuting violators of the TCPA, and require the implementation of the SHAKEN/STIR call authentication framework by voice service providers.

It also–and most critically–creates a working group including most every federal agency with an enforcement arm designed to enhance regulatory enforcement of the TCPA. This creates a clear and present danger that regulators will become more involved enforcing the statute in the near term

Source:https://bit.ly/31d7owS

The House Energy and Commerce Committee held a hearing entitled “Legislating to Stop the Onslaught of Annoying Robocalls” on April 30, 2019, that focused on seven bills pending before the Committee. While lawmakers and witnesses generally agreed that illegal and abusive robocalls are a problem, the fix or immediate solution in the form of new legislation was less clear.

Chairman Mike Doyle (D-PA) opened the hearing by summarizing the current state of pervasive robocalls and calling for voice service providers to make available call-blocking services to all customers free of charge. Rep. Greg Walden (R-OR) shared this sentiment, emphasizing the need for a bipartisan solution with wide support. As Walden observed, robocalling is a topic that comes up at every single town hall meeting held in recent months. Several bill sponsors made opening statements regarding their respective bills, which we summarize briefly below…

Source:https://bit.ly/2Xv93eK

Just over two weeks into the 116th Congress’s session, two powerful, telecommunications-focused Senators have reintroduced a bi-partisan piece of legislation that, if enacted, would amend the TCPA to provide for more enhanced administrative enforcement powers and increased civil penalties.

On Thursday, January 18, Senator John Thune (R-S.D.), chairman of the Subcommittee on Communications, Technology, Innovation, and the Internet, and Senator Ed Markey (D-Mass.), author of the TCPA, reintroduced the Telephone Robocall Abuse Criminal Enforcement and Deterrence (“TRACED”) Act (S. 151).  Originally introduced in November 2018, the bill proposes several changes to the TCPA that, according to the Senators, are designed to ramp up enforcement against unwanted robocalls and text messages and “give the FCC more flexibility to enforce the law…”

Read Entire Story: https://bit.ly/2IHEoaC

March 11, 2019

Hold on to your hats.  The TRACED Act (S. 151), which encourages the FCC and other federal agencies to increase enforcement of the TCPA, is gaining serious bipartisan support.  We’re heading into dangerous territory.

Reintroduced in January by Senators Ed Markey (D-Mass.) and John Thune (R-S.D.), the TRACED Act is billed as legislation that will finally “stop the scourge of robocalls” that impact millions of Americans each year.  Last Friday, ten additional co-sponsors signed onto the bill: Senators Dick Durbin (D-Ill.), Richard Blumenthal (D-Conn.), Shelley Moore Capito (R-W.Va.), Tammy Duckworth (D-Ill.), Cory Gardner (R-Colo.), John Hoeven (R-N.D.), Amy Klobuchar (D-Minn.), Jerry Moran (R-Kan.), Marco Rubio (R-Fla.), and Sheldon Whitehouse (D-R.I.).  54 state and territory attorneys general—from California to Mississippi— all commissioners of the FCC and FTC, along with industry and consumer groups have also thrown their support behind the bill…

February 20, 2019

While the FCC continues to tread carefully in evaluating the thorny issue of how broadly to interpret  the TCPA’s definition of “automated telephone dialing system,” particularly as it confronts proposed legislation that, if adopted, would ultimately expand the reach of the TPCA, the Commission has decided to move forward with some less controversial issues.  In particular, the Commission’s leadership took two actions last week as part of an effort to address mounting concerns about the influx of unwanted and illegal robocalls, particularly including the prevalent use of fake caller ID information to dupe consumers into answering the phone when a telemarketer calls or, even worse, providing sensitive information based on a false impression that they are speaking to a reputable company or government agency…