By: Terance A. Gonsalves, Partner at Alston & Bird LLP
On August 2, 2022, 51 state attorneys general formed the nationwide Anti-Robocall Litigation Task Force to investigate and take legal action against telecommunication companies responsible for the majority of robocalls into the United States. The bipartisan nationwide task force has one goal: to cut down on illegal robocalls.
The task force acted swiftly and just filed a major lawsuit against VoIP provider Avid Telecom and its owner Michael D. Lansky accusing them of making and transmitting billions of illegal robocalls.
The task force began its investigation into Avid Telecom on August 1, 2022, when it issued a civil investigative demand ― a request for documents and information ― to Avid Telecom. When Avid Telecom failed to fully respond to the CID, the task force asked a court on November 1, 2022, to compel Avid Telecom to respond to its CID.
By May 2023, the task force had collected a significant amount of information regarding Avid Telecom’s business practices. On May 23, 2023, the task force filed a 141-page lawsuit against Avid Telecom, its owner Michael D. Lansky, and its Vice President of Operation and Sales, Stacey Reeves. The lawsuit asserts claims under the Telephone Consumer Protection Act, Truth in Caller ID Act, as well as numerous state consumer protection, advertising, deceptive trade and telecommunications statutes.
Avid Telecom is a VoIP business that makes and transmits telephone calls. It provides services to retail customers who place robocalls and telemarketing calls, as well as customers who are other voice service providers that transmit robocall and telemarketing calls. According to the lawsuit, VoIP providers like Avid Telecom cater to callers using robocalling technology that allows high call volumes in short durations. These robocallers can make multiple calls in a single second. According to the task force, Avid Telecom allegedly made or attempted to make 24.5 billion calls over a 4 year period and that 93% of those calls were less than 15 seconds long.
Not only is the volume of calls remarkable, the claims in the lawsuit are stunning. The lawsuit says the defendants facilitated the transmission of robocall campaigns in which the telemarketer:
- Misrepresented material aspects of the goods or services;
- Misrepresented the telemarketer’s affiliation with corporations and government entities;
- Made false statements to induce consumers to purchase goods or services;
- Failed to transmit the real telephone number and the name of the telemarketer in the recipients caller ID;
- Called telephone numbers on the National Do Not Call Registry;
- Initiated outbound telephone calls that delivered prerecorded messages; and
- Failed to disclose the identity of the seller of the goods or services
For example, the calls that Avid Telecom routed to consumers included alleged scams related to social security disability, Medicare rewards, auto warranty extensions, employment requests, and companies like Amazon and Direct TV.
Apparently, Avid Telecom also “spoofed“ caller IDs in an effort to circumvent the authentication requirements of STIR/SHAKEN. The spoofed caller ID numbers came from federal and state law enforcement agencies, including the Internal Revenue Service, Federal Bureau of Investigations, U.S. Department of Homeland Security, U.S. Secret Service, Federal Communications Commission, Federal Trade Commission and numerous others. The spoofed caller IDs were also associated with well-known companies such as Comcast, Wells Fargo, Apple, Amazon, Experian, American Express, Citi, Mastercard, Visa, Microsoft, UPS, FedEx, Best Buy, Walmart, Verizon, AT&T, Quicken Loans, eBay, E*TRADE, Merrill Lynch, and many others.
The lawsuit claims that Avid Telecom also provided substantial support and assisted sellers and telemarketers engaged in illegal robocalling, including:
- Making or routing their customers’ illegal calls to consumers;
- Protecting one of their customers when the owner became the subject of federal and state law enforcement actions;
- Providing customers with the telephone numbers used to make illegal calls;
- Providing customers with leads to make illegal calls; and
- Providing customers with expertise on how to run their illegal robocalling and telemarketing schemes.
The lawsuit also outlined the task force’s case for individual liability for Lansky and Reeves. Lansky allegedly controlled Avid Telecom’s corporate bank accounts, credit cards, check books, and PayPal accounts, and he comingled money from those accounts with his personal business. Lansky and Reeves also directly participated in the conduct, and directed others who committed illegal conduct knowing it was illegal.
The task force claims Avid Telecom received 329 complaints from the US Telecom-led Industry Traceback Group (ITG) that it was carrying illegal robocall traffic, including calls made to phone numbers on the National DNC Registry. Thus, the task force says Avid Telecom knew that its conduct was illegal and was violating telemarking laws. The purported prior express consent Avid Telecom submitted as evidence of authorization to make some of the calls was invalid and made clear that those calls violated the TSR. The lawsuit further details numerous notices that Avid Telecom received from multiple providers that its customers were sending suspected illegal robocalls.
The lawsuit also details that several of Avid Telecom’s customers were subject to enforcement actions, lawsuits, cease and desist letters, some of which resulted in settlement, fines and judgments and that Avid Telecom knew about these matters. The task force claims Avid Telecom knowingly worked with ― and in some cases assisted ― these customers despite their history of sending illegal robocalls.
However, despite the voluminous number of complaints and notices from multiple sources that it customers were making illegal robocalls, Avid Telecom continued offering services to entities and persons making these illegal robocalls.
The lawsuit seeks civil penalties, attorney’s fees and costs, as well as permanent injunction to prevent defendants from making, initiating, and/or transmitting illegal robocalls to consumers in the United States.
Finally, on June 7, 2023, the Federal Communications Commission issued a cease and desist to Avid Telecom. The letter stated that Avid Telecom is originating illegal robocall traffic for one or more of its clients. The letter directed Avid Telecom to investigate the claims and take steps to stop Avid Telecom from continuing to be a source of illegal robocalls.
Avid Telecom has not yet filed a response in court regarding the lawsuit and it is unclear if it has responded to the FCC’s letter.