Smartbiz, Florida AG Argue Traceback Claims in State's Robocall Suit

The Florida AG's suit alleges Smartbiz is “one of the most prolific transmitters of illegal robocalls” in the U.S. in its December 2022 lawsuit, which alleges the company also violated the Telemarketing and Consumer Fraud and Abuse Prevention Act and other statutes, plus the FTC's Telemarketing Sales Rule (TSR) (see 2212060034).

The AG’s office said knowingly transmitting “fraudulent, abusive, and deceptive telemarketing calls is actionable regardless of a company’s position in the call path,” and that records show Smartbiz had “actual knowledge it was transmitting illegal calls and failed to stop them.” The AG cited “hundreds of traceback notifications” to the company with descriptions and recordings that “made plain the illegal nature of Defendant’s traffic.” Other intermediate providers in Smartbiz’s network escalated complaints to the company, “which spelled out the fraudulent and deceptive nature of Defendant’s call traffic,” the AG said.

In its reply, Smartbiz said that out of over 250 alleged tracebacks, the AG “can only point to 9 which it claims shows [Smartbiz] was one or two hops from an international originator.” Five of those were from 2020 and the other three show that Smartbiz “was numerous hops removed from the person making or initiating the call,” it said.

In its Monday reply to Smartbiz’s response to the AG’s Oct. 16 motion for summary judgment, the AG asked the court to grant the motion, saying Smartbiz didn’t address the knowledge “imparted by hundreds of tracebacks, complaints from downstream providers and indicia of illegal traffic” in its call detail records. Smartbiz “had actual notice that its services were being used for unlawful purposes" and that "whether any specific call could have failed to connect or may have ended before an illegal message was delivered is immaterial.” Smartbiz shouldn’t be able to “ignore clear evidence that its services are being used unlawfully because of speculation that some percentage of calls may not be illegal,” said the AG’s reply.

Smartbiz argued that it can’t be held liable for violating the TSR because “it changed its business model to avoid being labeled as the point of entry for suspected illegal traffic and because the FTC has not sued it,” said the AG. The point of entry designation “merely means that Defendant’s customer who passed it a suspected illegal call self-reported in the FCC’s Robocall Mitigation Database, potentially inaccurately, that it was a U.S. based company,” said the reply. Smartbiz’s argument it could not have violated the TSR because the FTC hasn’t sued it is “meritless” because the agency has “limited resources and cannot file lawsuits against every company that violates the TSR,” it said.

Smartbiz’s response to the AG’s statement of material facts disputes that call recordings captured by robocall blocking service YouMail were placed exclusively to cellular or residential phone services, said the AG’s reply. Using a residential landline as an office phone does not remove that line from the scope of the TCPA, it said.

If the court requires more proof that calls transmitted by Smartbiz and captured by YouMail were made exclusively to cellular or residential lines, YouMail has identified 83,852 calls it captured where “its customer’s phone number was associated with a cellular service" at the time the consumer signed up for YouMail’s services and at the time of the call that appeared in Smartbiz's call detail records, said the AG’s reply. All those calls had prerecorded or artificially voiced messages, it said.

YouMail’s services are marketed to consumers and used overwhelmingly by individuals to protect noncommercial phone numbers, said the AG’s response. “If the court is concerned that some consumers may be using YouMail on a non-cellular or residential phone line, then for at least 83,852 calls YouMail’s records demonstrate that the calls were undeniably to cellular lines,” it said. If the court determines that the calls violate 47 U.S.C. Section 227(b)(1)(A)(iii), then the AG is entitled to statutory damages of at least $41.9 million, it said.