Voice over IP phone company Vonage is being sued by the Texas attorney general for allegedly failing to warn users that an emergency 911 service was not automatically included in subscriptions.
The action has been brought after a Texas woman failed to get through to police after using a Vonage IP phone during an armed burglary, during which her parents were shot and wounded.
The automatic emergency services line could not recognise her phone and pinpoint her location and recommended she used another phone, which she did not have.
As VoIP systems use the internet and bypass the public switched telephone network, emergency services cannot use the fixed line phone system to trace a caller location.
In response to the lawsuit, Vonage, which has recently entered the UK market, said it did warn customers that they had to sign up to a separate 911 service to make emergency calls.
VoIP companies looking to exploit the UK market have said that the rule that all new service providers must provide a 999 emergency service is a barrier.
Telecoms regulator Ofcom is considering whether they should still have to as part of a consultation into voice over broadband services. Ofcom's initial stance is that they shouldn't.
Vonage says it has 500,000 customers in the US and is opening 15,000 new accounts a week.