Warned More Than 100 Times: How the TollFreeDeals Robocall Carrier Case Ended

Warned more than 100 times. Never cut off a single bad customer before the government sued.

The backstory

In January 2020, the Department of Justice (DOJ) sued two sets of voice over internet protocol (VoIP) carriers for carrying foreign robocalls into the U.S. One case was against Nicholas and Natasha Palumbo of Scottsdale, Arizona, and their companies, Ecommerce National LLC, doing business as TollFreeDeals.com, and SIP Retail, doing business as sipretail.com. The other was against Jon Kahen and three companies.

March 2020: the court steps in

On March 27, 2020, the DOJ announced that the U.S. District Court for the Eastern District of New York had entered orders in both cases.

In United States v. Nicholas Palumbo, et al., the court entered a preliminary injunction barring the defendants from carrying any VoIP calls destined for U.S. phones, and from providing any U.S. phone numbers, while the case was pending. The court found probable cause that the defendants were engaged in "widespread patterns of telecommunications fraud."

The court noted that the defendants had been warned more than 100 times about specific fraudulent calls on their network, and never severed a business relationship with any entity tied to fraudulent traffic before the lawsuit. It also said "the telecommunications 'intermediary' industry is set up perfectly to allow fraudulent operators to rotate telephone numbers endlessly and blame other parties for the fraudulent call traffic they carry."

In United States v. Jon Kahen, et al., the court entered consent decrees permanently barring an individual and three entities from operating as intermediate VoIP carriers conveying calls into the U.S. phone system.

August 2020: permanent

On August 26, 2020, the DOJ announced that U.S. District Judge Eric R. Komitee had entered a consent decree resolving the Palumbo case. The Palumbos and their companies agreed to be permanently barred from:

• delivering prerecorded messages through automatic means over the U.S. phone system;
• carrying VoIP calls destined for U.S. phones;
• providing U.S. phone numbers to anyone; and
• working as employees, agents or consultants for anyone doing those things.

According to the DOJ, the defendants also sold toll-free and other U.S. numbers to foreign call centers, which were used as call-back numbers in robocall messages.

The Social Security Administration, Office of the Inspector General (SSA OIG) and the U.S. Postal Inspection Service (USPIS) led the investigation. The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) provided data.

Here's the thing ...

"Blame other parties." The judge nailed it. Read that again.

Every intermediate carrier can point upstream. "It's my customer's traffic." Fine. But if you get warned 100 times and keep the customer? It's your traffic now.

What to do this week

• Log every warning and what you did about it.
• Cut customers after repeat fraud notices. Don't wait for a lawsuit.
• Vet who buys your numbers, especially foreign buyers.
• Respond to tracebacks quickly and completely.

Do it before somebody makes you.