California-based Skyy Consulting violated the Telemarketing Sales Rule by providing voice-over-Internet services that allowed clients to place illegal outbound prerecorded telemarketing calls, the Federal Trade Commission alleged in a recent complaint.

Doing business as CallFire, the defendant has the ability to make thousands of telephone calls with prerecorded messages simultaneously as well as the ability to control the name and number displayed on a recipient’s caller ID. According to the complaint, the company knew – or consciously avoided knowing – that its clients delivered illegal robocalls, including those promoting the sale of insurance, debt consolidation, and mortgage services.

The company failed to “effectively prevent the delivery of prerecorded messages that are prohibited by the TSR,” the FTC alleged, nor did it require that clients demonstrate they have excluded numbers from the National Do Not Call Registry when they used CallFire’s voice broadcasting service.

Although declining to admit liability, Skyy agreed to settle the charges by paying a $75,000 civil penalty and reviewing all prerecorded messages of its clients prior to delivery. If the company discovers a client in violation of the Rule, Skyy promised to terminate the contract.

Commissioner Maureen K. Ohlhausen wrote a separate concurrence joining her Commissioners in approving the proposed consent decree, but she emphasized that she did so because of CallFire’s complicity.

“I would not support imposing liability on a party merely for creating or providing a product or service with legal uses, absent reason to believe that the party knows or consciously avoids knowing that its client is using it to violate the TSR,” she wrote. “In this matter, however, I support the imposition of liability because CallFire actively encouraged clients to use its robocall service to target large numbers of consumers for marketing purposes, without any inquiry to whether its clients were complying with the TSR.”

To read the FTC’s complaint and proposed consent order with Skyy Consulting, click here.

Why it matters: The agency’s action serves as an important reminder that a company can violate the TSR by providing substantial assistance or support to a seller or telemarketer it knows or consciously avoids knowing is in violation of the Rule. In addition to the prohibition on certain types of telemarketing calls to those numbers on the National Do Not Call Registry, the TSR prohibits robocalls to induce the purchase of goods and services without prior, express consent.