Blog Enforcement Watch September 14, 2020

FTC Announces Settlement with Company Who Allegedly Used Robocalls to Target Cash-Strapped Consumers

On July 24, 2020, the Federal Trade Commission (FTC) announced that it settled charges with the operators of a Florida-based company that allegedly defrauded financially-distressed and often older-adult consumers with deceptive robocalls.  The proposed court order would ban the defendants from selling debt relief services and from all telemarketing based on their alleged violations of the FTC Act, 15 U.S.C. § 41 et seq., and the Commission’s Telemarketing Sales Rule. 

According to the FTC’s complaint and announcement, the defendants ran a maze of interrelated operations targeting financially distressed consumers with offers of bogus credit card interest rate reduction services.  Allegedly, the defendants deceptively told consumers through their calls that for a fee they could lower their credit card interest rates to zero percent permanently for the life of the debt.  However the complaint alleged that consumers did not get a permanent reduction to zero percent on their credit card interest rates.  Instead, the defendants purportedly obtained promotional or “teaser” zero percent interest rates that only lasted for a limited time, after which the interest rate increased significantly.  

The FTC’s complaint also alleged that the defendants failed to tell consumers that they would have to pay substantial additional bank or transaction fees.  Further, the complaint alleged that the defendants caused illegal telemarketing calls, including robocalls, to go out to numerous consumers, including many whose phone numbers were on the National Do Not Call Registry.  The defendants allegedly tricked consumers into providing their personal financial information, including their Social Security and credit card numbers, under the guise of confirming consumers’ identities.  Finally, in many instances, the FTC alleged that consumers who did not buy the services later discovered the defendants had applied for one or more credit cards without their knowledge or consent.

The proposed settlement order permanently bans the defendants from any involvement in the sale of debt-relief products or services, and all telemarketing, and bans them from using or benefitting from any consumer information collected through the scheme.  The order also imposes a judgment of $13,881,865 against the defendants, which will be partially suspended based on their inability to pay.