In its second case against a Voice over Internet Protocol (VoIP) service provider, the FTC announced that it has reached a proposed settlement with Alcazar Networks Inc. and its owner Gavin Grabias concerning the FTC’s charges that they facilitated tens of millions of illegal telemarketing phone calls.  The proposed settlement bars Alcazar and Grabias from engaging in similar misconduct in the future, requires them to screen and monitor their customers, and imposes a monetary penalty of $105,562.

According to the FTC’s complaint, the defendants assisted and facilitated illegal robocalls in violation of the FTC’s Telemarketing Sales Rule (TSR) and continued to do so even after learning customers were using their service to initiate calls to numbers on the FTC’s Do Not Call (DNC) Registry.  They allegedly further facilitated calls from overseas and calls that displayed spoofed caller-ID numbers, including displaying “911.”

The FTC specifically contends that Alcazar provided VoIP services to customer Derek Bartoli (who was the subject of an FTC action for allegedly violating the TSR).  Bartoli allegedly made more than 50 million illegal telemarketing calls using Alcazar’s services even after Alcazar learned Bartoli was calling consumers on the DNC Registry without permission to do so.  In addition, many, if not all, of Bartoli’s calls were robocalls that displayed spoofed caller-ID numbers.

The proposed order settling the FTC’s complaint specifically prohibits Alcazar and Grabias from violating the TSR or assisting anyone else in doing so; permanently bans them from assisting telemarketers or overseas customers with dialing robocalls or calls to phone numbers on the DNC Registry—regardless of whether those customers purportedly have permission to do so; requires them to implement automated procedures to block calls that display the caller-ID number as “911,” related emergency numbers, or unassigned, or invalid numbers; requires them to screen current and prospective customers, including high-risk customers, before providing them with VoIP services; and requires them to end current business relationships with customers who fail to pass a reasonable screening process.