Florida v. Smartbiz Telecom: A State Attorney General Takes an Intermediate Carrier to the Edge of Trial

The bottom line: a court held an intermediate carrier liable under the Truth in Caller ID Act and the Telemarketing Sales Rule (TSR) for calls it only transmitted.

The allegations

The complaint brought claims under the Telemarketing and Consumer Fraud and Abuse Prevention Act, the TSR, the Telephone Consumer Protection Act (TCPA) and Florida's Deceptive and Unfair Trade Practices Act (FDUTPA). It alleged that:

1. The Industry Traceback Group (ITG) notified Smartbiz at least 255 times since April 7, 2020, about illegal calls on its network.
2. Of roughly 1,225 companies that had received tracebacks, only 28 had received more than Smartbiz.
3. Smartbiz billed in increments as short as 0.6 seconds, which appealed to robocallers.
4. Its contracts said parties could not withhold payment because fraudulent calls made up part of the traffic.

The complaint described Social Security, Amazon and credit card interest rate robocalls that crossed Smartbiz's network.

The summary judgment ruling

On September 19, 2024, Judge Jose E. Martinez ruled on cross motions for summary judgment:

1. Truth in Caller ID Act (Count III): granted for Florida.
2. TSR and FDUTPA (Counts IV and V): granted for Florida. The court found Smartbiz provided substantial assistance to telemarketers while knowing of their violations. It cited more than 16,000 "Medical Coverage Center" calls, over 10,000 of them to numbers on the National Do Not Call Registry.
3. TCPA (Counts I and II): denied. The court found Smartbiz had actual notice of illegal use, but whether its robocall mitigation steps were adequate was a question for a jury.

The court also noted that Smartbiz received at least 256 traceback notifications between June 2020 and January 2023, and that one of its own suppliers sent at least fifteen complaints about spoofed numbers and scam calls.

The consent judgment

Smartbiz neither admitted nor denied the allegations. The judgment requires it to:

1. Pay the Attorney General $65,000, starting with $5,000 within seven days and then $5,000 a month for twelve months.
2. Request information from any customer sending "Dialer Traffic," defined as traffic where 35% or more of non-zero duration calls in a 24-hour period last less than six seconds. That includes evidence of prior express written consent for prerecorded calls.
3. Refuse dialer traffic from customers who won't provide that information or whose traffic appears illegal.
4. Block a customer's trunks for 48 hours, then terminate it, if 25% or more of its dialer traffic matches the called party's area code and exchange, or uses invalid numbers, unless the customer proves the traffic is legal.
5. Maintain dialer traffic on segregated trunks.

What this means for you

1. "We just carry the calls" has not succeeded at summary judgment.
2. Answering tracebacks is not enough if the traffic keeps flowing.
3. Short duration and neighbor spoofing thresholds are now written into an enforceable order. Expect them to show up in other cases.