More than one year after the Federal Trade Commission announced a joint enforcement effort with multiple state attorneys general to target robocall scams, the agency reached a settlement with the remaining six defendants.
Last October the FTC and officials in Arizona, Arkansas, and Florida filed a complaint against five companies and their principals accused of making illegal prerecorded calls claiming to be “Rachel” from “Cardholder Services.” Some of the defendants entered into a settlement with the FTC earlier this year.
The FTC’s complaint had alleged that the defendants placed automatic calls that began with a prerecorded message. Recipients who elected to speak with a representative were connected to a telemarketer who pitched a deceptive offer to reduce credit card debt and save the consumer thousands of dollars in finance charges. Sometimes the marketers claimed to be employed by the consumer’s credit card company.
In addition to misrepresenting that they would be able to pay off consumer debts more quickly as a result of lowered credit card fees and making false claims about their refund policies, both in violation of Section 5 of the FTC Act, the defendants also charged illegal up-front fees in violation of the Telemarketing Sales Rule, the agency said.
Pursuant to the settlement, the defendants – some of whom were repeat offenders – are banned from telemarketing and the marketing of debt relief services. The agency said some “extremely limited exceptions” were included in the stipulated final order to allow the defendants to engage in legitimate business conduct.
In addition, the settlement prohibits defendants from misrepresenting any financial product or service and requires them to provide substantiation for any claims about the potential benefits or effectiveness of any product or service.
The order also imposes a partially suspended $11.9 million judgment against the corporate and individual defendants.
To read the complaint and stipulated agreements in FTC v. ELH Consulting, click here.
Why it matters: When the complaints were filed last year, then FTC Chairman Jon Leibowitz called Rachel from Cardholder Services “public enemy number one.” Now that the Telephone Consumer Protection Act requires prior express consent for telemarketing calls made using an autodialer or prerecorded message, we expect robocalls to remain a top enforcement priority for the FTC.