In February 2023, the U.S. Justice Department announced that, together with the Federal Trade Commission, a civil enforcement action had been filed against several corporate and individual defendants for alleged violations of the FTC Act and the Telemarketing Sales Rule in connection with telemarketing campaigns that allegedly illegally bombarded American consumers with millions of robocalls.

According to the complaint filed in the U.S. District Court for the Southern District of California, defendant telecommunications service companies Stratics Networks, Inc. and Netlatitude Inc., along with defendant Kurt Hannigan, Netlatitude’s president, violated the TSR by providing substantial assistance and support in the form of technological services to telemarketers that purportedly unlawfully called consumers with robocalls delivering prerecorded marketing messages, called numbers listed on the National Do Not Call Registry, and failed to truthfully identify the seller of the goods and services being marketed.

These alleged robocalls purportedly include numerous “ringless voicemails” delivered to consumers without making their telephones ring.

The complaint also initiated claims against several additional defendants that allegedly used Stratics Networks, Inc.’s ringless voicemail platform to illegally telemarket credit-card debt relief services. According to the complaint, defendants Tek Ventures, LLC (also doing business as Provident Solutions), Atlas Marketing Partners, Inc., Atlas Investment Ventures, LLC, Eric Petersen and Todd DiRoberto (who are co-owners of those three companies), Kasm, and Kenan Azzeh (owner and director of Kasm) violated the FTC Act by misrepresenting the terms and outcomes of their debt relief services.

These defendants also allegedly violated the TSR by making those misrepresentations, by failing to clearly and truthfully identify the seller of their services, and by calling consumers with prerecorded messages without first obtaining their consent. The complaint also alleges that defendants Tek Ventures, LLC, Atlas Marketing Partners, Inc., Atlas Investment Ventures, LLC, Eric Petersen, Todd DiRoberto, and two additional defendants – Ace Business Solutions LLC and its owner and director Sandra Barnes – violated the TSR by requesting and receiving payments from their debt relief customers before renegotiating or otherwise altering the terms of those customers’ debts.

The complaint sought a permanent injunction to prohibit the defendants from future violations, as well as monetary civil penalties and relief to redress injury caused to consumers.

According to the FTC, in February 2023 two defendants, Kasm and its owner and director Kenan Azzeh, agreed to entry of a court order that resolves the claims against them. The stipulated order, if entered by the court, would prohibit these defendants from further violations and impose a monetary judgment of $3,380,000, suspended to $7,500 due to their limited ability to pay. In June 2023 Netlatitude Inc. and Hannigan separately stipulated to an order for permanent injunction, monetary judgment and other relief, including prohibition against violating the TSR, a permanent ban on assisting and facilitating high risk customers, a ban on certain telephone calls, an obligation to screen current and prospective customers, and an obligation to terminate (or refrain from entering into) any business relationship with certain clients if a review reveals certain enumerated facts.

“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.”

“This case targets the ecosystem of companies who perpetrate illegal telemarketing to cheat American consumers who are struggling financially,” said FTC lawyer and Director Samuel Levine 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.”

Stratics Networks, Inc., however, argued that it is entitled to protection under the Communications Decency Act – Section 230 because it is not responsible for the “content” at issue (the RVM that alleged violated the TSR) merely by virtue of the transmission thereof. Section 230 of the Communications Act provides, in pertinent part, for limited federal immunity to providers and users of interactive computer services.

In what can only be construed as a win for platform providers, the FTC’s allegations against Stratics have been dismissed. The lead generator RVM senders were not so fortunate at the action’s preliminary stages as the court held that RVM constitute telephone calls for purposes of the Telemarketing Sales Rule (in addition to the Telephone Consumer Protection Act).