DOJ Fails to Identify Single Illegal Robocall Initiated by XCast, Says TSR Defendant

Citing lack of subject-matter jurisdiction, XCast said it wasn’t given an opportunity to defend itself before an administrative body associated with the FTC against claims that are “completely misdirected” at it, a “telecom carrier, instead of a telemarketing company.” The company violated no underlying orders of the FTC, which has no authority to assert alleged violations against it, said the answer.

DOJ has no authority to assert FTC regulations on XCast, which has a “small portion” of its business that functions as a common carrier; common carriers are regulated by the FCC, XCast said, saying DOJ's claims lack constitutional authority.

DOJ’s complaint fails to identify a specific instance of an illegal robocall initiated by XCast, and it falsely claims that XCast made “billions of robocalls,” presumed to be illegal, “without identifying one single instance of a consumer receiving an illegal robocall” from the company. XCast isn't required to subscribe to the do not call registry, so it can’t be in violation of its requirements, said the filing.

XCast wasn’t given notice it was under investigation for robocalls until presented with a draft complaint in December, it said. The FTC conducted a civil investigative demand before filing the complaint without indicating that XCast was being investigated, it said, claiming denial of due process.

The FTC lacks jurisdiction over carrier traffic, said XCast’s sixth defense. The FTC has no jurisdiction to regulate how calls are transmitted and can only subject a call to its jurisdiction if the call is read or heard to determine its content. Telecom carriers are forbidden by privacy laws to read or hear calls without a subpoena or other legal means, and the FTC and the FCC “are under the same constraints when it comes to privacy,” it said.

In its answer to the complaint, XCast said it doesn’t have sufficient information to form a belief as to whether any of its customers placed calls to numbers on the national do not call registry. It denied it failed to disclose the name of a seller, claimed false affiliations, made false and misleading statements to induce purchases or contributions and that it transmitted false or deceptive caller ID numbers. XCast also denies that call duration is an indicator of fraudulent robocall campaigns and said if call duration were a legitimate metric to institute call blocking, “such a metric would be required by the [FCC] and not the FTC."

Since December 2018, USTelecom’s Industry Traceback Group (ITG) has notified XCast that it routed and transmitted suspected illegal robocall traffic on behalf of upstream carriers or end users, DOJ alleged. ITG notified XCast of the suspected illegal calls through traceback requests to identify the source of the suspicious traffic, the complaint said. ITG sent XCast over 100 traceback requests in 2020 and more than 90 in 2021, alleged the FTC, and for “dozens” of them, it was either the originator of the suspected robocall or the point-of-entry from a foreign service provider.

Many of the requests ITG sent XCast noted the calls at issue were “perpetrating fraud" by impersonating federal officials, threatening to cut off utilities and using corporate names without permission, said the complaint. Other problems noted were use of prerecorded messages, failure to identify caller or seller, and spoofed ID information, alleged the complaint.

XCast denied it received about 100 traceback requests in 2020 or about 90 in 2021. It admitted it received about 28 requests in 2022 and 15 to date this year. It admitted ITG had access to recorded calls but denied a recorded call can identify a call initiator.

In August 2019, XCast received a subpoena from federal prosecutors for information and call records for its customer e-Sampark, a VoIP provider in India that was subsequently indicted for conspiracy to commit wire fraud in a robocall scheme, said the complaint. In its answer, XCast denied e-Sampark was its customer and said a number identified by Georgia prosecutors in a subpoena wasn't assigned to e-Sampark.

In its counterclaims, XCast said it's not a telemarketer and, as an “intermediate” carrier, it doesn’t know the content of messages “passing through its switches.” Its equipment may be one of many “hops” a message passes through on the way from sender to recipient, it said.

Unwanted robocalls “are not illegal, and in fact, many robocalls are desirable,” said XCast, citing prerecorded messages announcing an evacuation due to impending disasters. The FTC’s website uses terms “probably” and “odds are” to define robocalls, said XCast. “By using terms like “odds are” and “probably,” the FTC acknowledges not all robocalls are illegal or unwanted. In fact, the vast majority are legal, it said.

The FTC knows most illegal robocalls come from overseas call centers, and “likely for political reasons,” the government doesn’t use diplomatic or international law enforcement tools to shut them down, XCast said. “Instead, the government seems content to shut down carriers whose network components play a role in delivering calls,” said the counterclaim. A call originating in India and terminating in California may have 10 hops and two internet service providers in between, it said.

DOJ’s statutory language that would entitle it to impose $50,000 penalties for each infraction would amount to a “$50 trillion fine” for “even one billion illegal robocalls,” XCast said. “That alone speaks to how misplaced an FTC statutory scheme simply does not apply to an FCC regulated common carrier like XCAST.”