Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC settles charges with home security company that called consumers on National Do Not Call Registry, (Mar 12, 2014)

By Linda O’Brien, J.D., LL.M.

The FTC announced today that, with the assistance of the U.S. Department of Justice, the agency has settled a complaint charging home security company Versatile Marketing Solutions (VMS) with illegally calling millions of consumers on the FTC’s National Do Not Call (DNC) Registry to sell home security systems.

According to the FTC complaint, (U.S. v. Versatile Marketing Solutions, Inc., File No. 122-3162), Massachusetts-based VMS, under the guidance of owner Jasjit Gotra, called millions of consumers whose names and phone numbers VMS bought from lead generators. The lead generators claimed that those consumers had given VMS permission to contact them about the installation of a free home security system, but in reality, they had not. In its complaint, the FTC alleges that the defendants’ tactics violated the Commission’s Telemarketing Sales Rule.

The sales leads were obtained by illegal means through rampant use of robocalls from “Tom with Home Protection,” phony survey calls, and calls to phone numbers on the National Do Not Call Registry. According to the complaint, VMS subsequently called these consumers without first checking to see if they had registered their telephone numbers on the DNC Registry.

In addition, the complaint alleges that VMS ignored warning signs that the lead generators were engaged in illegal telemarketing practices. For example, many consumers contacted by VMS complained that they had not given the company permission to call, nor had they given permission to receive a telemarketing call. Despite mounting complaints, VMS continued to buy leads from the same lead generators, and call consumers using those leads.

The stipulated final order settling the charges prohibits VMS and Gotra from making abusive telemarketing calls and from calling any consumer whose number is on the DNC Registry, unless they can prove that they have received written permission to make the call or that they have an established business relationship with that consumer. Further, it bars defendants from calling any consumer who has previously told VMS not to call them again. The order also places restrictions on how defendants can obtain and use lead-generated phone numbers in the future.

Finally, the order imposes a $3.4 million penalty judgment against the defendants, with all but $320,700 suspended due to their inability to pay. The entire amount will become due if the defendants are found to have misrepresented their financial condition.

“Companies that use lead generators must exercise due diligence when they buy lists of phone numbers,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, “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.”

The Commission vote authorizing the staff to refer the civil penalty complaint to the Department of Justice, and to approve the proposed consent decree, was 4-0.

Companies: Versatile Marketing Solutions, Inc.

News: ConsumerProtection Privacy FederalTradeCommissionNews