The Federal Trade Commission took action against Versatile Marketing Solutions and owner Jasjit Gotra after millions of calls were placed to consumers on the Do Not Call list. According to the FTC, the defendants purchased names and numbers from a lead generator that promised Versatile the consumers had given permission to contact them about the company’s home security systems. In reality, the lead generators obtained the sales leads by using robocalls, fake survey calls, and calls to numbers listed on the Do Not Call Registry, the agency alleged.

Versatile failed to confirm that the numbers were not listed on the Do Not Call Registry, however, and turned a blind eye to indications that the lead generators were engaging in illegal telemarketing, the FTC said. Red flags should have waved for the defendants after receiving repeated complaints from consumers that they had not provided their consent to be contacted—yet Versatile continued to use the lead generators.

Between November 2011 and July 2012, at least one million of Versatile’s more than two million sales calls were made to phone numbers listed on the Registry, the FTC alleged in its complaint. Additional violations occurred when the defendants called more than 100,000 numbers after consumers specifically instructed Versatile not to call again.

To settle charges of violating the Telemarketing Sales Rule and Section 5 of the FTC Act, the defendants reached a stipulated final order. Versatile and Gotra consented not to violate the Rule or make calls to numbers listed on the Registry unless they can prove written permission was received or an established business relationship exists with the consumer.

Restrictions on how the defendants can use lead-generated phone numbers—such as ensuring compliance with existing lead generators and conducting due diligence on new partners to maintain compliance with the order – were also agreed upon. A $3.4 million penalty judgment was suspended except for $320,700.

To read the complaint and stipulated final order in United States v. Versatile Marketing Solutions, click here.

Why it matters: The enforcement action serves as a valuable reminder to advertisers that do not pay attention to red flags when calling numbers obtained from lead generators to ensure compliance with the Telemarketing Sales Rule. “Companies that use lead generators must exercise due diligence when they buy lists of phone numbers,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a press release about the settlement, “or else they can be on the hook for illegal telemarketing. Relying on a say-so that the numbers were obtained legally, or that the consumers have agreed to be called, even if their numbers are on the Do Not Call Registry, isn’t enough.”