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WBK Industry News - Federal Regulatory Developments

Numerous Companies Fined for Violating the FTC Telemarketing Sales Rule

Recently the US District Court for Colorado entered a stipulated order against several companies, working as “lead generators,” for using methods which violated the FTC’s Telemarketing Sales Rule (“TSR”). The Order mandates a fine and a permanent injunction precluding the lead generators from taking certain actions which would violate the TSR, including calling individuals on the Do Not Call Registry. The stipulated Order did not require Defendants to admit or deny the allegations in the FTC’s Complaint.

According to the FTC’s Complaint, a collection of entities, known as Consumer Education Group, violated the Do Not Call Registry by calling consumers without using a name consumers would recognize as an entity they authorized to call them. Defendants created websites to gain personal information about consumers and then used that personal information to make calls to consumers, regardless of their appearance on the Do Not Call Registry, to gauge the consumers’ interest in various products. The Defendants ultimately sold the consumer information they obtained through the calls to third parties as generated leads.

The FTC alleged that Defendants violated the TSR by illegally making telemarketing calls to consumers who appear on the Do Not Call Registry and using robocalls in telemarketing. The recent Order bars the Defendants from making outbound telemarketing calls to consumers on the Do Not Call Registry, from making telemarketing calls to consumers who have asked not to be contacted again, and from making pre-recorded telemarketing calls to consumers without express permission to do so. Additionally, a $2.3 million penalty was imposed on Defendants; however, it was suspended as Defendants’ financial status would prohibit them from paying the penalty. Instead, the Defendants will pay $100,000 to the U.S. Treasury.

The Order is available at: https://www.ftc.gov/system/files/documents/cases/161101consumer_education_info._filed_proposed_order.pdf.