The Federal Trade Commission working with the Florida Attorney General's Office, filed suit against a group of related defendants, charging them with "bombarding" consumers with illegal robocalls in an attempt to sell debt relief services and credit card interest rate reductions.
A federal court granted the regulators' request for a temporary restraining order halting the operation, which the FTC and AG said took in more than $15.6 million since January 2013 and made "hundreds of thousands" of robocalls.
Collectively known as Life Management Services of Orange County, LLC, the defendants used generic names like "Bank Card Services" and "Credit Assistance Program" when calling consumers, claiming to be a "licensed enrollment center" for credit card networks such as MasterCard and Visa, the FTC and AG said. The defendants promised to work with credit card companies or banks to "substantially and permanently" lower credit card interest rates and save consumers thousands of dollars by paying off their balances three to five times faster, according to the complaint filed in Florida federal court.
Instead, consumers were charged an upfront fee of between $500 and $5,000 and the defendants made, at best, a rudimentary effort to contact some credit card companies, the regulators alleged.
The defendants further deceived consumers by offering a credit card debt elimination service. By tapping into a government fund, the defendants claimed that they could pay off a consumer's debt in 18 months—for an upfront payment of between $2,500 and $20,000. Since no such fund actually exists, the consumers who paid for the purported service only found themselves deeper in debt, according to the complaint.
How did the agency obtain its evidence against the defendants? In the case against Life Management, the FTC told the court it relied upon a "telephone honeypot," a bank of phone lines designed to attract robocalls. FTC investigators were the parties answering the calls, and had the opportunity to interact with callers to identify them and document their claims.
While the action seeks a permanent stop to the defendants' operations and money for consumer refunds for violations of the Federal Trade Commission Act, the Telemarketing Sales Rule, and Florida's Deceptive and Unfair Trade Practices Act, so far the court has only ordered a temporary halt pending an upcoming hearing.
To read the complaint and the TRO in FTC v. Life Management Services of Orange County, click here.
Why it matters: The case was the 39th action taken since January 2015 as part of a collective enforcement effort with state regulators and other countries to halt robocall operations. Actions with agencies ranging from the United Kingdom's Information Commissioner's Office to the offices of the attorneys general in Colorado, Missouri, and Washington, among others, have all focused on combatting "the nuisance of illegal robocalls," the Commission explained. To further these efforts, the FTC announced that 11 international regulatory organizations signed a new memorandum of understanding "to share information and intelligence in the worldwide fight against unsolicited messages and calls." Signatories, all members of the London Action Plan, include regulatory agencies in Australia, Canada, Korea, Netherlands, New Zealand, South Africa, and the United Kingdom, with the FTC and the Federal Communications Commission signing on for the United States.