[co-author: Stephanie Kozol]*
On August 16, a coalition of seven state attorneys general (AG) announced a settlement with participants alleged to be involved in a “massive” robocall operation. The stipulated order, which names Scott Shapiro, Michael T. Smith, Jr., and Health Advisors of America (defendants), permanently bans Shapiro and Smith from initiating or facilitating robocalls; working in or with companies that make robocalls; and engaging in telemarketing. The settlement also requires the defendants to make monetary payments to the coalition, which is comprised of AGs from the states of Arkansas, Indiana, Michigan, North Carolina, North Dakota, Ohio, and Texas (the AGs).
The settlement comes after the AGs impleaded the defendants into its larger case against Rising Eagle Capital Group LLC. In the complaint, the AGs alleged the defendants “initiated millions of [r]obocalls[] advertising various goods and services, including healthcare products” to residential and/or cellular telephone numbers without obtaining consumers’ prior express consent. The complaint further alleges that these actions violated the Telephone Consumer Protection Act and its implementing rules;” the Telemarketing Sales Rule; and state “unfair and deceptive acts and practices” laws.
The stipulated order secures both injunctive and monetary relief against the defendants. Specifically, it permanently bans Shapiro, Smith, and their companies from engaging in robocall-related activities in the plaintiffs’ states. It also bans them from engaging in lead generation or telemarketing for 10 years in the plaintiff states, and from engaging in such activities for two years on a nationwide basis. Finally, the order also includes a monetary judgment in the amount of $73,076,930, but only requires defendant Shapiro to pay $250,000. The remainder of the monetary judgment is suspended due to the defendants’ “financial situation.”
Why It Matters
For several years, regulators at both the state and federal levels have continually focused on eliminating robocalls by bringing coordinated enforcement actions, forming cross-agency working groups, and supporting federal legislation designed to curb robocalling. The defendants’ settlement demonstrates that it is essential to monitor the regulatory environment, and to adjust business practices to minimize risk. The settlement also shows the AGs’ willingness to implead business affiliates who are found to be involved in a larger scheme. As such, businesses of all sizes should conduct due diligence to monitor their affiliates’ business practices.
*Senior Government Relations Manager
