The Federal Trade Commission (FTC) has taken legal action against a group of companies and individuals accused of sending millions of robocalls promoting debt relief services to consumers across the US. The Department of Justice (DOJ) filed a lawsuit on behalf of the FTC in federal court against the interconnected web of operations, alleging violations of the Telemarketing Sales Rule (TSR) and the FTC Act.
The lawsuit targets Stratics Networks, Inc., a company that sold its wholesale SIP termination service to other VoIP technology service providers, including Netlatitude, Inc. and its owner Kurt Hannigan, and many others. Stratics also sold access to its platform for delivering ringless voicemail (RVM), a call that goes directly to a consumer’s voicemail without ringing their phone. According to the complaint, Netlatitude used Stratics’ wholesale SIP termination services to operate its own RVM service, which it then sold to a foreign telemarketer of debt relief services.
The complaint alleges that the interconnected platform providers, lead generators, telemarketers, and debt relief service sellers violated the TSR in many ways, including making misrepresentations regarding debt relief services, assisting and facilitating violations of the TSR, and initiating illegal pre-recorded telemarketing messages, commonly known as robocalls.
The DOJ also filed a proposed consent order against one of the companies and individuals involved in the operation, KASM, which would prohibit the company and its owner, Kenan Azzeh, from making the misrepresentations alleged in the complaint and from violating the TSR. It also requires the defendants to review the methods used by their existing lead generators, determine and obtain leads sold or offered to them illegally, and stop buying leads from any lead generator found to have sold them such leads.
The proposed consent order imposes a $3.38 million judgment against the defendants, which will be partially suspended based on their inability to pay, after they pay the FTC $7,500 to be used for consumer redress. If they are later found to have misrepresented their financial condition, the full amount will immediately become due.
“This case targets the ecosystem of companies who perpetrate illegal telemarketing to cheat American consumers who are struggling financially,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC will continue to take aggressive action to protect consumers from the scourge of illegal robocalls.”
“The Department of Justice is committed to stopping individuals and companies from making illegal robocalls and peddling predatory debt relief services,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “We will continue to work with the FTC to enforce the FTC Act and the Telemarketing Sales Rule against those who use misleading sales tactics to prey on consumers.”
The litigation against the non-settling defendants is ongoing, and the FTC has warned that it will continue to take aggressive action against illegal robocalls to protect consumers from fraudulent debt relief services.
The proposed consent order against KASM is subject to court approval, and the defendants will be required to comply with its terms, which include prohibiting misrepresentations about debt relief services and requiring compliance with the TSR.
In the meantime, the FTC and DOJ are urging consumers to report any illegal robocalls or fraudulent debt relief services they receive. Consumers can file a complaint with the FTC at donotcall.gov or by calling 1-888-382-1222.