As part of its August 2017 Open Meeting, the Federal Communications Commission (“FCC”) issued a Notice of Apparent Liability for Forfeiture (“NAL”) proposing over $82 million in fines against Philip Roesel and the insurance companies he operated for allegedly violating the Truth in Caller Act by altering the caller ID information (a/k/a “spoofing”) of more than 21 million robocalls in order to generate sales leads and avoid detection by authorities. The FCC separately issued a Citation against Mr. Roesel and his companies for allegedly violating the Telephone Consumer Protection Act by transmitting the robocalls to emergency, wireless, and residential phone lines without consent. The NAL and Citation represent just the latest salvos in the FCC’s continuing assault on robocalling in general and deceptive uses of spoofing in particular. With $200 million in proposed fines in only two cases, it is clear that such issues will remain an enforcement priority under Chairman Pai.

Intent to Cause Harm

The FCC’s investigation stemmed from consumer complaints regarding a robocalling campaign advertising insurance products sold by Mr. Roesel’s companies. A medical paging service complained to the FCC when the campaign disrupted its subscriber communications, including service at South Carolina hospitals. Based on the information provided by the complainants, the FCC traced the robocalls to an account registered to Mr. Roesel at his personal address. After subpoenaing his phone records, the FCC determined that Mr. Roesel and his companies allegedly made over 21 million unauthorized robocalls in a three-month span, averaging 200,000 calls a day. Critically, the FCC analyzed a sample of about 82,000 robocalls and found that the caller ID information transmitted belonged to unassigned numbers unconnected to Mr. Roesel or his companies. Further investigation revealed that Mr. Roesel allegedly selected these numbers to mask the source of the calls for consumers and avoid detection by authorities.

The FCC found that the deceptive spoofing, when done in conjunction with an unauthorized robocalling campaign, automatically demonstrated the “intent to cause harm” necessary to violate the Truth in Caller ID Act. Moreover, statements obtained by the FCC from a whistleblower formerly employed by Mr. Roesel indicated he knew the spoofed robocalls violated the law and targeted “economically disadvantaged and unsophisticated consumers” as well as the elderly in his campaign. The FCC determined that the campaign not only harmed the consumers called and disrupted the medical paging service, but also that his actions reduced the supply of quality phone numbers available for assignment. Specifically, because the (unassigned) numbers used by Mr. Roesel and his companies were now linked to allegedly illegal telemarketing, these unassigned numbers have no value to future subscribers.

Personal Liability

Consistent with past enforcement actions involving spoofed robocalls, the FCC found Mr. Roesel personally liable for the alleged violations. First, the FCC noted that Mr. Roesel allegedly authorized and oversaw his companies’ spoofed robocalls. Second, Mr. Roesel allegedly failed to follow normal corporate formalities, mixing personal and corporate accounts, such as by setting up the campaign under his own name and paying for the campaign from his personal funds. The FCC found such personal involvement in the alleged violations sufficient to “pierce the corporate veil” and propose fines directly against Mr. Roesel.

The proposed forfeiture represents a fine of approximately $1,000 for each of the more than 82,000 robocalls allegedly spoofed with an unassigned number. Notably, the Truth in Caller ID Act authorizes the FCC to propose an NAL against entities not holding FCC licenses, without first issuing a “warning” in the form of a Citation. By contrast, the Telephone Consumer Protection Act contains no such exemption and required the FCC to issue the Citation for the alleged unauthorized robocalls by Mr. Roesel and his companies before it can propose forfeitures. The Citation warns that the FCC may impose penalties of nearly $20,000 per unauthorized robocall if Mr. Roesel or his companies commit any further violations. Judging by the FCC’s recent emphasis on stamping out unauthorized robocalls under Chairman Pai, there is every reason to heed such warnings and expect further robocalling-related enforcement actions.