FTC Ends Robocall Scam in $13.9M Consent Judgement

A group of Florida telemarketers have agreed to stop telemarketing and selling debt relief services, as part of a $13.9 million consent judgement made by a Florida federal judge. This judgement resolves the Federal Trade Commissions claims that the companies have violated federal law by scamming consumers.

According to the FTC, a company doing business as CSG Solutions and then as Second Choice Horizon, scammed consumers through robocalls. Allegedly, the telemarketing scam took advantage of particularly vulnerable individuals, getting them to hand over sensitive information on a false promise of zero percent interest rates. Now, the companies will be permanently prohibited from operating what the FTC calls a robocall scam. 

The consent judgement makes a number of permanent requirements of the company, and imposes a fine of $13,881,865. The Federal Trade Commission voted on the judgement, with one commissioner not participating. The votes were 4-0-1 approving the order, made by the remaining commissioners.

The defendants are no longer allowed to conduct telemarketing, nor use or benefit “from any consumer information collected” through their robocall scam.  The companies have also been banned from the following activities:

• engage in the sale of debt-relief services and products
• apply for any cash product on behalf of customers without their consent or fully informed knowledge
• taking credit card cash advances on a customer’s behalf without prior approval
• submitting billing information without a customer’s consent

The $14 million fine has been partially suspended, as the parties making up the company (Raymond Gonzales, Carlos S. Guerrero, Joshua Hernandez and 11 other entities) reportedly are not able to pay the full amount. To pay what they can of the judgment, the members of these entities will be required to liquidate assets including personal and corporate bank accounts, stock proceeds, jewelry, interest in realty, properties themselves, and two water vessels.

Robocall Scam Allegations

The robocall scam suit alleges the telemarketing company would advertise that they could lower interest rates on existing credit cards to 0% permanently. However, the rates offered were merely introductory, says the FTC. The commission asserts that after a short period of time, consumers were hit with significantly higher interest fees – making these promises deceptive and illegal.

According to the FTC, the company sent out these robocalls to numbers even if they were on the National Do Not Call Registry. 

The FTC goes into more detail about the nature of the supposed scam. The company targeted older adults and those in financial distress, zeroing in on those more likely to be susceptible to scams. Second Choice would cold call consumers who often had no prior interaction with the company. To make matters worse, the telemarketers allegedly operated not just through one business, but “a maze of interrelated operations” says the FTC.

Operating as these companies, the telemarketers would then target consumers experiencing financial distress and desperate for a solution to their debt. Promises were made that, for a small fee, the company could get rid of the interest on their debt, leaving them interest-free for the life of the debt.

After consumers paid the fee, however, they discovered that the savings were only temporary, as opposed to the promised permanent reduction. The FTC complaints note that customers also later discovered that they would be hit with significant transaction and bank fees, though these were not disclosed by the company before the customers signed up.

The complaint also asserts that the company even targeted those customers who did not decide to sign up for services. Allegedly, the company would wheedle sensitive information out of consumers during initial contact, by saying that they needed to confirm an individual’s identity. This information included credit card numbers and Social Security numbers. Second Choice and its affiliated companies would then allegedly make a practice of using this sensitive information to sign consumers up for credit cards without their knowledge or permission.

Consumer Protection

The FTC and the federal government at large attempts to protect consumers from a range of scams, including robocall scam efforts, via laws like the Telephone Consumer Protection Act (TCPA) and the FTC Telemarketing Sales Rule.

The Justice Department and the FTC are now aiming to crack down with more severity on COVID-19 related scams. Like Second Choice Horizon allegedly aimed to prey upon vulnerable and desperate individuals, many scammers are attempting to implement scams that take advantage of the public’s fear and desperation about the coronavirus. 

Scammers may be using robocalls to reach out to many consumers about bogus cures, vaccinations, or ineffective products related to the coronavirus. The Telephone Consumer Protection Act has allowed some emergency messages to be sent to consumers regarding the coronavirus, allowing consumers to have access to the information they need. Cornell Law digs into what communications qualify as emergency communications under the TCPA. 

However, some companies may send fake emergency messages to trick consumers into buying a useless product or service, in violation of the TCPA’s restrictions. Now more than ever, the government and Federal Trade Commission are trying to protect consumers during a time of crisis. The Supreme Court even banned robocall use by debt collectors.

The Telemarketing Robocall Scam Lawsuit is Federal Trade Commission v. Second Choice Horizon LLC, et al., Case No. 6:19-cv-01028, in the U.S. District Court for the Middle District of Florida.

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If you were contacted on your cell phone by a company via an unsolicited text message (text spam) or prerecorded voice message (robocall), you may be eligible for compensation under the Telephone Consumer Protection Act.

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This article is not legal advice. It is presented
for informational purposes only.