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Why it matters: Following up on FCC Chair Ajit Pai's directive to crack down on robocalls, the FTC announced that it had shut down and fined four robocall scammers earlier this week. While it is not a lot compared to the hundreds or even thousands of shady operations out there, at least the commission has taken some kind of action.
The Federal Trade Commission (FTC) has been busy this week. In addition to its notice of an investigation into the privacy practices of broadband providers, the commission announced yesterday it had settled lawsuits with four robocall operations.
NetDotSolutions, Higher Goals Marketing, Veterans of America, and Pointbreak Media, all agreed to shut down and pay fines as part of their settlements. The penalties ranged from $500,000 up to $3.64 million per defendant. Operators of the businesses are also banned from opening or running other similar companies.
According to the FTC press release, all four operations were engaged in or facilitated fraudulent activity. The companies reportedly bilked billions from consumers and businesses.
NetDotSolutions had a robocalling platform called “TelWeb,” which is sold or licensed to other telemarketing firms including fraudulent debt-relief services. It was charged with facilitating illegal robocalls, calling people on the Do Not Call registry, and spoofing caller IDs. The company owners were fined in total $1.4 million with $5.35 million suspended due to inability to pay.
"Four separate operations responsible for bombarding consumers nationwide with billions of unwanted and illegal robocalls pitching auto warranties, debt-relief services, home security systems, fake charities, and Google search results services have agreed to settle with the FTC."
Higher Goals Marketing operated a fake debt-relief service and had previously been shut down by a court order under a different name. It was fined $3.15 million, which the FTC will suspend once the company turns over all of its assets.
Veterans of America was a charity scam that solicited vehicle donations for veterans. The items never went to charity but were sold for profit. The scam operated under at least six other aliases including Vehicles for Veterans, Medal of Honor, and Donate That Car LLC. The owner was fined $541,032.10, which will be suspended upon relinquishing “significant assets” including 88 vehicles to the FTC.
Pointbreak Media was a Florida-based scam that would call businesses claiming that it represented Google. Of course, the company was not affiliated with Google whatsoever.
It would “inform” victims that their companies were about to be removed from search results. Telemarketers would tell firms that fell for the ruse that they could stop the removal and guarantee first-page placement for payments ranging from $300-$700. They further threatened that if payment were not made, the businesses would be marked “permanently closed.”
Three operators in the scam were fined a total of $12.72 million with the highest penalty being $3.64 million. Defendants can have the fines suspended after handing over assets to the FTC totaling a fraction of the amounts imposed.
While shutting down four robocall scams is only a drop in the bucket for addressing a rising problem, at least it’s a start. Perhaps other companies operating similar shady telemarketing services will get the hint and take their money and run. However, greed is a powerful force, so don’t hold your breath that this problem will go away any time soon.