A proposed settlement agreement between the Federal Trade Commission (FTC) and a Los Angeles-based telemarketing business, SBN Peripherals (d/b/a Asia Pacific Telecom Inc.), bans the company and several others involved with the business from telemarketing. The defendants were accused of violating the FTC Act, the Telephone Consumer Fraud and Abuse Prevention Act (“Telemarketing Act”) and the Telemarketing Sales Rule (TSR). This is yet another case to demonstrate the FTC’s commitment to stop deceptive robocallers.

The FTC Act prohibits unfair and deceptive trade practices. The Telemarketing Act prevents abusive or deceptive telemarketing acts and practices. The TSR is the rule often used to enforce these acts as they apply to telemarketers. In the complaint, the FTC alleges that the defendants violated these acts by placing numerous telemarketing sales calls to sell goods and services including extended auto warranties and credit card interest rate reduction programs. For example, the defendants used auto-dialers and prerecorded messages to call defendants and notify them that the defendants had information regarding that individual’s credit card or automobile warranty when that was not the case. Additionally, the FTC alleged that the defendants transmitted deceptive caller ID information, and contacted consumers listed on the national Do Not Call registry.

As a result of these practices, the FTC issued a permanent ban on telemarketing and prohibited the defendants from engaging in deceptive sales practices, as well as from selling or otherwise using customer information, which they have been ordered to dispose of within 30 days. Additionally, the FTC imposed a monetary judgment of $5.3 million that is suspended based on an inability to pay. However, the FTC will reportedly receive approximately $3 million in assets.

Companies engaged in telemarketing should be aware of this case as well as the TSR and acts listed above. The FTC is committed to protecting consumers from deceptive telemarketing practices and this case is yet another example of this commitment. Any company engaged in telemarketing should be sure to provide proper disclosures, should avoid using automatic dialers and prerecorded messages where these activities violate the FTC or Federal Communications Commission rules. Companies should also be sure to purchase the Do Not Call registry to verify that no numbers dialed are listed.

Arent Fox is continuing to monitor actions involving advertising and telemarketing practices. Please contact Anthony Lupo, Sarah Bruno, Matthew Mills or Eva Pulliam with questions.