FTC Sues iVoIP Providers and Others that Participated in Illegal Debt Relief Scam: Scammers Could be Liable for Billions of Dollars in Fines and Other Sanctions

The Federal Trade Commission (“FTC”) Thursday sued to stop a coordinated series of operations responsible for delivering tens of millions of unwanted Voice Over Internet Protocol (“VoIP”) and ringless voicemail (“RVM”) phony debt service robocalls to consumers across the United States. The Department of Justice (“DoJ”) filed a Complaint in the U.S. District Court Southern District of California on the FTC’s behalf.

Among other things, the Complaint alleges that interconnected VoIP (“iVoIP”) carriers Stratics Networks Inc. (“Stratics”) and Netlatitude, Inc. (“Netlatitude”) violated the Telemarketing Sales Rule (“TSR”) by providing and implementing technology to initiate outbound robocalls to consumers’ phones in order to illegally market other defendants’ phony debt relief services. The TSR prohibits abusive and deceptive telemarketing acts or practices. See 16 C.F.R. § 310.

Specifically, the Complaint charges that Stratics’s outbound VoIP calling service enabled its clients to route and transmit millions of robocalls. From at least 2013 to 2020, Stratics sold its wholesale session initiation protocol (“SIP”) termination service to other VoIP providers, including defendants Netlatitude and its owner Kurt Hannigan. Stratics also sold access to its platform for delivering RVM, a call that goes to a consumer’s voicemail without ringing their phone. Netlatitude used Stratics’ wholesale SIP termination services to operate its own RVM service, which it then sold to a foreign telemarketer of debt relief services.

The Complaint further alleges that other Stratics customers included lead generation telemarketers that allegedly used Stratics’ services to blast illegal robocalls to millions of consumers nationwide. Despite receiving repeated notices from USTelecom’s Industry Traceback Group (“ITG”) that some customers’ robocall traffic was likely illegal, the complaint outlines how Stratics ignored ITG’s communications and continued to assist the debt relief schemes, which included numerous other defendants. The Complaint seeks various forms of recompense including: (a) a permanent injunction against the defendants to prevent future violations of the TSR; and (b) monetary and other sanctions, including civil monetary penalties for every violation of the TSR. Considering the vast scope of the Complaint, monetary damages could total billions of dollars.

The DOJ also filed a proposed Settlement Order involving one of the companies and its owner that were involved in the debt relief scheme. The Settlement Order would, if approved by the court, bar the defendants from making further misrepresentations about debt relief services, order them to take specific steps to comply with the TSR, and levy a monetary judgment in the amount of $3,380,000.00. The DoJ proposes a partial suspension of the monetary judgment due to the defendants successfully demonstrating their inability to pay the full monetary judgement. This partial suspension significantly reduced the defendants’ monetary liability to $7,500. If, however, plaintiffs can demonstrate that the subject defendants failed to fully disclose any material asset or made any material misrepresentation in proving their inability to pay, the partial suspension will be lifted, and the defendants will be ordered to pay the full amount of the monetary judgment.


The CommLaw Group Can Help!

Given the complexity and evolving nature of the FCC’s rules, regulations and industry policies & procedures around Robocall Mitigation and Compliance issues (e.g., Stir/Shaken, TRACED Act, FCC Rules & Regulations, US Telecom Industry group, ATIS, NECA, VoIP Numbering Waivers, Know Your Customer and the private sector ecosystem), as well as the increased risk of business disputes, consumer protection enforcement by state attorneys general, and even civil litigation, and anticipating the potential torrent of client questions and concerns, The CommLaw Group formed a “Robocall Mitigation Response Team” to help clients (old and new) tackle their unique responsibilities.

Michael Donahue — Tel: 703-714-1319 / E-mail: mpd@CommLawGroup.com
Rob Jackson – Tel: 703-714-1316 / E-mail: rhj@CommLawGroup.com
Ron Quirk – Tel: 703-714-1305 / E-mail: req@CommLawGroup.com

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