FTC settles first case against VoIP provider for allowing illegal robocalls

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WASHINGTON — The Federal Trade Commission said Tuesday that Globex Telecom, Inc. of Canada and an affiliated company will pay $1.95 million to settle charges that Globex allowed a robocaller to use its equipment to swindle consumers out of millions of dollars. The FTC and the state of Ohio said Globex allowed a telemarketer, Educare Centre Services, to make illegal robocalls, peddling bogus and illegal services to reduce consumers’ credit card interest rates for an upfront fee.

The settlement is the FTC’s first consumer protection case against a Voice over Internet Protocol (VoIP) service provider. The FTC said it may not be the last. ““We will continue to go after companies like Educare that target people using these unlawful practices, and VoIP service providers like Globex who knowingly help them violate the law,” said Andrew Smith, director of the FTC’s Bureau of Consumer Protection. Most phone lines that aren’t cell lines use VoIP these days.

Under the settlement, Globex and its subsidiaries must block spoofed calls and various suspicious calls, including calls with a Caller ID of 911. Spoofed calls use a fabricated phone number to make it seem like the call is coming from someone else, such as the IRS, your local police department or a neighbor. Most spoofed calls have bad intentions.

In response, U.S. PIRG Education Fund Consumer Watchdog Teresa Murray issued the following statement:

“Going after companies that make robocalls possible is a first step, but federal regulators must do much more. Robocalls are the No. 1 complaint reported to the Federal Communications Commission and have been for many years. Robocallers place about 5 billion illegal calls to U.S. consumers and businesses every month.

“What’s worse is that fraud from these intrusive and unwanted calls costs consumers about $10 billion a year, according to the FTC. That’s a staggering $26 million that con artists get from innocent consumers every single day. Not to mention, these fraudsters often target the most vulnerable among us: senior citizens, young adults, the poor and people who are in debt or unemployed.

“While the FCC last year started allowing cell phone and home phone companies to block calls if they believe they are scams or are spoofing another phone number, it has not made it mandatory to block calls that are spoofing numbers. This is infuriating.  If a caller is pretending to be someone else, such as a major bank or your local police department or a government agency, isn’t that a pretty good indication the call could be trouble?

“This FTC settlement must be a wake-up call to phone service providers so they do more to protect consumers. If not, the FTC must be vigilant in going after companies that enable this immoral practice. And the FCC should require providers to block spoofed calls that we all know are scams.”