U.S. Court orders record penalty for fraudulent robocalls

A U.S. Federal Court in New York has ordered a $30 million penalty against a fraudulent robocall operator in an action brought by the Federal Trade Commission (FTC).  According to the FTC release the $30 million in fines is by far the largest penalty ever imposed for unlawful calls to consumers who are on the Do-Not-Call Registry.

The phone calls in this case made claims about the availability of free grant money and directed recipients to websites which made the same claims.  Instead of providing direct information about available grants, the websites solicited fees for providing general information about obtaining the grants.  The details about the grant application process were provided to clients paying the fee who then learned about the application processes (which were often cumbersome and for which they would not be eligible).  The defendants had been doing business under various names including The Cash Grant Institute, Global Ad Agency, Global Advertising Agency, Domain Leasing Company, and/or Cash Grant Search..

In granting summary judgment the court stated:

“… the FTC has established through the unrebutted evidence submitted to the court that the defendants, through their recorded robocalls and statements made on their websites, made material representations regarding governmental and private grant opportunities that were likely to mislead consumers. Specifically, the defendants, in their automated telephone calls, informed consumers that they were already qualified to receive cash grants from the public or private agencies.”

The court found that the FTC had established that the defendants  violated the Telemarketing Sales Rule (an FTC regulation made under the Telemarketing Act) by:

  • making calls to consumers who were registered on the “do not call” list;
  • failing to pay the fee required to access the “do not call” registry;
  • failing to provide an opt-out mechanism for consumers;
  • failing to connect consumers to a live operator within two seconds of a request to do so; and by
  • making false statements to consumers in an effort to induce them to pay for services that would allegedly enable them to easily and quickly receive public or private grants.