Court Should Deny SmartBiz Motion to Dismiss Robocall Suit: Fla. AG

SmartBiz “knowingly plays a significant role in connecting scammers to consumers in Florida and elsewhere,” said Florida Attorney General Ashley Moody (R), in a Friday response (docket 1:22-cv-23945) in U.S. District Court for Southern Miami in Florida, asking the court to deny the telecom company’s Feb. 2 motion to dismiss. Moody sued SmartBiz in December for violating the Telemarketing and Consumer Fraud and Abuse Prevention Act and other statutes, plus the FTC's Telemarketing Sales Rule.

SmartBiz asked the court to dismiss the action or join unnamed additional parties. The complaint doesn’t need detailed factual allegations, but the allegations must be enough to raise a right to relief above the speculative level, said the response. That the complaint doesn’t name specifically injured Florida residents is “misplaced” because Moody is bringing claims under federal law to protect the economic well-being of Florida residents “and the integrity of Florida’s marketplace.”

FCC regulations under the Telephone Robocall Abuse Criminal Enforcement and Deterrence (Traced) Act don’t condone SmartBiz’s “illegal business practices and are no barrier to liability,” Moody said. SmartBiz purports to be an intermediate VoIP provider, meaning its customers are other VoIP providers “and not the entity that is directly dialing the telephone and attempting to communicate with the called party,” Moody said. But the company “does not properly vet its customers to determine where they are located and the type of call traffic they send,” and at least some of SmartBiz customers “appear to misrepresent the nature of their businesses,” he said.

SmartBiz’s argument it doesn’t initiate phone calls is “meritless,” said Moody. SmartBiz is “one link in a chain of service providers who each play a role in connecting the call,” and it has the ability to stop the attempted call "before it ever reaches a potential victim.” The illegal use of the company's network to “perpetuate serious fraud” and its failure to prevent such transmissions -- as well as its involvement in making the illegal calls -- puts SmartBiz in violation of the Telephone Consumer Protection Act, Moody said.

SmartBiz’s transmission of scam calls causes “intangible harms and risk of real harm,” said Moody, citing the “substantial risk that some consumers will lose money to scams” and others will be burdened by wasting time engaging with scammers. He noted “at least 16,298 likely fraudulent calls” the company routed from a single customer over two days that occupied recipients’ phone lines for more than two minutes.

The lawsuit is broader than blocking or not blocking robocalls, said Moody, saying Florida seeks to enjoin SmartBiz from its “knowing transmission of illegal call traffic." Blocking is one method but not the only way the telecom company should address such traffic, he said, saying FCC regulations provide “substantial latitude” to block calls: “There is no reason that Defendant cannot both comply with TRACED Act regulations and stop knowingly transmitting illegal robocalls to consumers.”