48 states sue phone company that allegedly catered to needs of robocallers

Nearly every US state yesterday sued a telecom company accused of routing billions of illegal robocalls to millions of US residents on the Do Not Call Registry. Avid Telecom, an Arizona-based company formed in 2000, "chose profit over running a business that conforms to state and federal law," according to a lawsuit led by Arizona AG Kris Mayes and joined by the attorneys general of 47 other states and the District of Columbia. The case involves every US state except Alaska and South Dakota. The lawsuit was filed in US District Court for the District of Arizona against Avid Telecom, CEO Michael Lansky, and VP of Operations and Sales Stacey Reeves. The lawsuit arises from work done by the Anti-Robocall Multistate Litigation Task Force of 51 attorneys general. "In the more than 7.5 billion calls to telephone numbers on the National Do Not Call Registry, Avid Telecom used spoofed or invalid caller ID numbers, including more than 8.4 million calls that appeared to be coming from government and law enforcement agencies, as well as private companies," a press release from the Arizona AG's office said. The lawsuit seeks a jury trial, a permanent injunction to prevent additional illegal robocalls, and financial penalties including "restitution or other compensation on behalf of residents" for illegal calls. The lawsuit cites the federal Telemarketing and Consumer Fraud and Abuse Prevention Act, the Telemarketing Sales Rule, the Telephone Consumer Protection Act, and certain state laws regarding unfair and deceptive trade practices.

Phone services customized for robocallers

Avid Telecom was accused of providing services to robocallers to make it easier to send illegal traffic. "Avid Telecom provided services customized to the needs of robocalling customers by enabling them to place a high volume of calls in quick succession, billing only for the duration of completed calls—typically in as little as 6-second increments—and ignoring clear indicia of illegal call traffic," the lawsuit alleged. Avid Telecom is a Voice over Internet Protocol (VoIP) company that "provides services to retail customers who are the originating callers that place robocall and telemarketing calls, as well as wholesale customers who are other voice service providers that route and transmit robocall and telemarketing calls," the lawsuit said. Of 24.5 billion calls that Avid sent or attempted to send between December 2018 and January 2023, about 93 percent allegedly lasted less than 15 seconds, an indicator of widespread robocalling. Robocalls allegedly included Social Security Administration scams, Medicare scams, auto warranty scams, Amazon scams, DirecTV scams, credit card interest rate reduction scams, and employment scams. Avid Telecom received at least 329 traceback notifications from the Industry Traceback Group led by trade group USTelecom, which means the defendants were "on notice that Avid Telecom was transmitting illegal robocalls," the lawsuit said. That wasn't the only warning as the Industry Traceback Group is said to have sent Avid Telecom "additional letters and correspondence... about needing to improve Avid Telecom's traffic screening procedures."

Verizon cut off traffic

Avid Telecom allegedly received complaints from other telecom providers that received Avid's call traffic. "Defendants were on notice from downstream providers that their customers were sending identified and suspected illegal traffic, which included illegal robocalls," the lawsuit said. For example, Verizon in December 2020 "sent Lansky a letter regarding the 'very large volume of' robocalls Avid Telecom was routing to Verizon," the lawsuit said. Verizon later notified Lansky that it was blocking Avid Telecom's traffic entirely because of "unacceptable levels of illegal or unwanted robocalls." Lansky allegedly responded to Verizon by complaining about its prices. "We term[inate] over 10 million min[ute]s a day of voice traffic with Verizon winning only a few dollars of it. We again as mentioned, can send you more and better traffic if the pricing was better," he allegedly wrote.

FCC actions against Avid customers

The lawsuit provided numerous other examples of warnings sent to Avid Telecom by additional phone companies that complained of "toll free pumping/spoofing" calls, "auto warranty robocalls," and more. Despite those warnings, Avid Telecom chose not to implement "effective and meaningful procedures to prevent—or even significantly mitigate—the perpetration of illegal behavior onto and across Avid Telecom's network," the AGs alleged. The Federal Communications Commission has taken action against robocallers that did business with Avid Telecom, the lawsuit said. In June 2020, "the FCC brought an enforcement action against Avid Telecom's customer John Spiller and JSquared Telecom LLC, which ultimately resulted in a record $225 million fine issued in March 2021," the lawsuit said. We wrote about that case at the time. The FCC also sent robocall cease-and-desist letters to seven "providers from which Avid Telecom accepted and routed identified and known illegal robocalls," the lawsuit said. There were additional legal actions by individual states and the Federal Trade Commission against Avid's customers. "Defendants knew about the Cease-and-Desist Letters sent to its customers, knew about the FCC's enforcement action against John Spiller and JSquared Telecom LLC, and knew about the States' lawsuit filed against its customer John Spiller and JSquared Telecom LLC, and several other related entities," the lawsuit said.

Evading Caller ID authentication tech

Separately, Avid facilitated over 5 billion calls from June 2020 to February 2021 for Sumco, which is facing a proposed $300 million FCC fine for auto warranty scam robocalls. "Defendants had direct knowledge that Sumco was sending them illegal call traffic," the lawsuit said. One of the FCC's top strategies in fighting robocalls is requiring IP phone networks to implement the STIR/SHAKEN authentication technology that verifies the accuracy of Caller ID by using digital certificates based on public-key cryptography. Avid Telecom had ways of getting spoofed calls around STIR/SHAKEN, the state AGs' lawsuit alleged:

Defendants provided their customers with Direct Inward Dialing numbers ("DIDs"), which would appear to the persons receiving the calls as the calling numbers or "Caller IDs." This service was likely provided to circumvent the procedural guardrails of the caller authentication framework of STIR/SHAKEN that would otherwise mark a randomly generated or used calling number as "unverified" and cause such calls to be blocked from being delivered to the called party at a network level by a downstream provider.

We contacted Avid Telecom, Lansky, and Reeves about the lawsuit today and will update this article if we get a response.