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Sales Lead Generators Fined and Barred from Violating FTC’s Telemarketing Sales Rule
A collection of entities known as Consumer Education Group operating out of California and Colorado, has settled Federal Trade Commission charges that, between late 2013 and 2015, it made millions of illegal telemarketing calls to consumers on the national Do Not Call (DNC) Registry — including pre-recorded robocalls — as part of a campaign to generate sales leads for third-parties.
The court order settling the Commission’s complaint bars the defendants from making such illegal telemarketing calls, ensures they will comply with the Telemarketing Sales Rule (TSR), and requires them to pay a $100,000 civil penalty. The U.S. Department of Justice (DOJ) filed the complaint and the order today on the FTC’s behalf.
“These telemarketers and lead generators ignored the Do Not Call Registry and made illegal robocalls,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “It should be clear by now that companies are headed for law enforcement trouble when they use this kind of unlawful campaign to attract customers.”
According to the FTC’s complaint, defendants created websites and landing pages that allowed consumers to complete an online form supposedly to get information about solar panels, reverse mortgages, walk-in bathtubs and other products. Defendants then used the consumers’ names and phone numbers to call the consumers, either by direct dialing or through robocalls, to gauge their interest in these products.
None of the calls placed to consumers identified the operation by a name consumers would recognize as someone they had authorized to call them. More than two million calls were placed to consumers registered on the DNC registry. The FTC alleged that the telemarketing campaign was not to solicit actual sales to consumers but rather designed to collect consumers’ names and phone numbers and sell the information as leads to third party merchants.
Based on this conduct, the FTC charged the defendants with violating the TSR by illegally making telemarketing calls to consumers whose phone numbers are on the DNC Registry and using robocalls in telemarketing. All such pre-recorded calls have been illegal since September 1, 2009, unless the company has an express agreement, in writing, from consumers agreeing to receive them.
The proposed civil penalty order settling the FTC’s charges bars the defendants from violating the TSR by making outbound telemarketing calls to consumers on the national DNC Registry unless they meet certain requirements, making telemarketing calls to consumers who have asked them not to call again, and making pre-recorded telemarketing robocalls to consumers unless they have their express permission to do so.
The proposed order imposes a suspended $2,339,687 civil penalty that is equivalent to the revenue defendants obtained through their illegal acts. The defendants will pay $100,000 to the U.S. Treasury due to their inability to pay the full penalty amount. If they are later found to have misrepresented their financial condition to the FTC, the full amount of the penalty will become due.
The Commission vote authorizing staff to refer the civil penalty complaint proposed consent order to DOJ for filing was 3-0. The DOJ filed the complaint and proposed consent order on behalf of the Commission in U.S. District Court for the District of Colorado on November 1, 2016.
A complete list of the settling defendants can be found in the proposed consent order linked to this press release on the FTC’s website.
NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. Consent orders have the force of law when approved and signed by the District Court judge.