August 9, 2023

Auto-Warranty Robocallers Receive $300 Million Fine From the FCC

Auto-Warranty Robocallers Receive $300 Million Fine From the FCC

One of the most prolific and annoying robocall scams in recent years is the car extended warranty campaign. These calls were so common that they became a national punchline and spawned dozens of memes. And while people could sometimes laugh about them, the reality was far from amusing.

The incessant campaign caused consumers to ignore and block more phone calls than ever before. Those who did purchase the warranties were usually stuck with a useless product. As a result, auto-warranty robocalls have lessened consumer trust and negatively impacted legitimate call centers.

The FCC’s Action Against Auto-Warranty Robocallers

The good news is that the government has finally acted against these scammers. On August 3, 2023, the FCC issued a $300 million fine against auto-warranty robocallers, a historic moment in the battle against illegitimate telecom companies.

The FCC action began in earnest in July 2022 when the Ohio Attorney General hit the robocall network with a lawsuit that detailed its organizational structure and other key details. The FCC then ordered US voice providers to refuse to carry calls from providers associated with the robocall network. Improved call-tracing measures allowed investigators to easily pinpoint networks facilitating robocalls.

These actions quickly reduced extended car warranty calls by 80% in the US. By August 2023, that reduction reached 99%, so the warranty scam was nearly extinct. But the FCC wanted to send a clear message to illegal robocallers still operating in the US.

FCC’s Findings

The $300 million fine reflects the seriousness of the crimes committed by auto-warranty robocallers. The FCC calls the scam “the largest illegal robocall operation the agency has ever investigated.” The operation was a complex network of international companies such as Sumco Panama, Davis Telecom Virtual Telecom, Posting Express, etc. Together these companies made billions of robocalls, including more than 5 billion to more than 500 million phone numbers in one three-month period.

Scores of people were involved in this effort, but it was led by Roy Melvin Cox Jr and Aaron Michael Jones despite previous violations and court orders to refrain from all telemarketing efforts. This latest FCC action should discourage similar violations by other repeat offenders.

FCC’s Continued Enforcement of Robocall Legislation

The FCC has the legislation that it needs to fight robocallers, so its future actions will focus more on enforcement than new regulations. There are positive signs on this front.

Cooperation between the federal government and individual state governments is thriving. The partnership between the FCC and Ohio has expanded to 46 additional states along with the District of Columbia and Guam. Although currently, the Justice Department has to collect the fines and then turn them over to the FCC, Congress may change the law to allow the FCC to directly collect future fines. This change would streamline the process and save the FCC time spent on enforcement efforts.

Previous FCC Sanctions

This latest FCC step stemmed in part from its October 2022 announcement that it would remove voice service providers from the Robocall Mitigation Database (RMD) if they did not improve their compliance measures. Expelled service providers were no longer able to use US phone networks, which resulted in far fewer robocalls. This action targeted seven carriers in particular, including Global UC, Akaic, SW Arkansas Telecommunications, Sharon Telephone Company, Cloud4, Horizon Technology Group, and Morse Communications.

In November 2022, the FCC made good on its threats by blocking Global UC from the entire US phone network. Global UC provided global businesses with inexpensive international call rates. Despite being warned about its numerous compliance issues, the company carried out its business as usual, which meant it refused to mitigate illegal robocalls on its call services.

The company was required to use caller ID verification methods and to outline its methods to reduce spam robocalls, but it failed to comply, leading to the November FCC action. Other violators now know that the government agency is serious and that they will suffer is they fail to follow regulations.

Protecting Your Business’ Reputation

This action should make U.S. consumers rejoice. The extended car warranty robocall is as good as dead after torturing millions of Americans multiple times since 2018. Comedians will have to retire many memes and jokes along with the dreaded phrase: We have been trying to reach you about your car’s extended warranty. The American public will be free of that infamous scam.

This FCC salvo is just the latest in a meaningful crackdown on illegal robocallers. While these latest developments are hopeful ones, bad actors are still abound in the telecommunications industry. Consumer distrust continues to be high, and few will answer calls unless they are convinced they are legitimate. That’s why you must continue embracing best practices for your outbound calling campaigns. TCPA, STIR/SHAKEN, and DNC compliance are essential to your efforts. As always, protecting your company’s reputation should be your number one concern.