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State Case You Need to Know – Attorneys General Take Action Against Telecom Provider Accused of Facilitating Robocalls

Conor J May

State Case You Need to Know – Attorneys General Take Action Against Telecom Provider Accused of Facilitating Robocalls
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State of Arizona et al v. Avid Telecom

On May 23, 2023, the attorneys general of 48 states and the District of Columbia (“Plaintiffs”) sued Arizona telecommunications firm Avid Telecom and two of its executives in federal court for allegedly routing billions of robocalls targeted at American consumers. “Robocalls”—unsolicited calls playing pre-recorded or artificial messages—have been a persistent annoyance for Americans for many years. They also provide a vehicle for scammers; consumer complaints collected by the Federal Trade Commission (FTC) indicate that consumers lost over $692 million to robocall scams in 2021.

Avid Telecom provides interconnected Voice over Internet Protocol (“VoIP”) services, which allow voice calls to be routed into the U.S. telephone network over the internet. Plaintiffs allege that between December 2018 and January 2023, Avid Telecom sent or attempted to transmit more than 24.5 billion robocalls across the United States. Avid received more than three hundred notifications from an industry watchdog, notifying Avid that its services were being used for illegal robocalling, which the company allegedly ignored.

Plaintiffs allege that Avid’s services are “customized to the needs of robocalling customers.” Avid bills by call duration (typically only a few seconds for robocalls), allegedly ignores indications of illegal activity, and sells or leases tranches of Direct Inward Dialing (“DID”) phone numbers. Robocallers can use DID numbers to “spoof” Caller ID, misleadingly causing the ID displayed to the call receipted to read as a legitimate entity rather than the actual caller, thereby avoiding FCC protocols designed to block unverified calls or numbers. The plaintiffs allege that Avid also advertised and provided consulting services to robocallers on “how to effectively conduct robocalling operations.”

The complaint cites violations of the federal Telemarketing Sales Rule, which prohibits assistance or support to those engaged in abusive or deceptive telemarketing practices; the Telephone Consumer Protection Act, which prohibits unsolicited, pre-recorded telemarketing and requires providers to take measures to prevent such calls; and the Truth in Caller ID Act, which prohibits spoofing. Eleven states have also brought claims under their consumer protection statutes. The states seek damages, restitution, civil penalties, and injunctive relief.

In July, the court granted Defendants a time extension to file their answer and noted that “the parties are engaged in early settlement discussions.” Defendants now have until September 7, 2023, to answer or otherwise respond to the Plaintiffs’ complaint.

States’ Role in the Ongoing Efforts to Stop Illegal Robocalls

Robocalls have proven a perennial challenge for policymakers and enforcers. Congress passed at least five separate bills targeting robocalls over the last thirty years. The Federal Communications Commission (FCC) created the original National Do Not Call Registry in 2003, and has since issued orders to make it easier for telecom providers to block robocalls and to prevent spoofing. The FTC implemented the Telemarketing Sales Rule to require disclosures from telemarketers and prohibit misrepresentations. The FTC has also brought enforcement actions, sometimes in tandem with state enforcers. In April, the Commission launched Project Point of No Entry (PoNE) to block robocalls originating overseas.

Despite these efforts, robocall scams remain a problem. Indeed, the frequency with which Congress and federal rule makers have returned to this issue reveals its intractability. Bad actors often operate anonymously and may be located outside the U.S. The rapidity with which scammers can set up a new operation led one state enforcer to refer to robocall prevention as “whack-a-mole in a target-rich environment.”

This intractability makes it all the more important that states take an active role in combatting illegal robocalls. Regardless of the specific outcome of the allegations against Avid, the case will likely provide a model for future actions. That model—coalitions of state enforcers suing under federal telecommunications laws and state consumer protection statutes—may become an integral part of the tapestry of U.S. robocall enforcement.

This article was prepared by the Antitrust Law Section's Media & Technology Committee.