Shortly after being named the acting chair of the Federal Trade Commission, Maureen Ohlhausen stated that a consumer protection priority during her tenure will be stopping fraudulent schemes targeting vulnerable individuals, including the elderly.
The Commission is making good on that promise.
In May 2017, the FTC announced a broad-sweeping nationwide and international crackdown on tech-support scams that tricked consumers into thinking that their computers were infected, then charged them hundreds of dollars for removal of non-existent viruses and malware. According to reports, “Operation Tech Trap” included complaints, settlements, indictments and guilty pleas. Additional cases continue to be filed by the Florida Attorney General.
Most of the defendants in these enforcement actions are alleged to have engaged in telemarketing activities in conjunction with the support services. In one particular action the telemarketing aspect ultimately served as a vehicle for a referral to the Department of Justice and the imposition of federal criminal fraud charges.
According to the indictments, the conspiracy and scheme to defraud operated from 2013 through at least 2016. During this period, the defendants allegedly victimized over 40,000 people and defrauded these individuals out of more than $25M. The victims were located in all fifty of the United States, the District of Columbia, Puerto Rico, several U.S. territories, all ten Canadian provinces, the United Kingdom and several other foreign countries.
The defendants have been charged with conspiracy to commit wire fraud.
The Senior Citizens Against Marketing Scams Act (the “SCAMS Act”) provides that individuals that are convicted of various, specifically enumerated offenses (or conspiring to commit such offenses) in connection with the conduct of telemarketing, such as devising a scheme to defraud or to obtain money by means of false or fraudulent pretenses, are subject to “enhanced penalties.”
The SCAMS Act further provides, in pertinent part, that such individuals:
- Shall be imprisoned for a term of up to 5 years in addition to any term of imprisonment imposed under the underlying statutory provision; and
- In the case of an offense under any of the specifically enumerated statutory provisions, that (i) victimized ten or more persons over the age of 55; or (ii) targeted persons over the age of 55, shall be imprisoned for a term of up to 10 years in addition to any term of imprisonment imposed under the underlying statutory provision.
Telemarketers and online lead generators that facilitate inbound and/or outbound telephone calls on behalf of third-parties are well-advised to fully consider the potential consequences of the actions of its marketing partners and to preemptively vet such activities. Willful blindness is not a defense and referrals to the DoJ, especially when there are telemarketing component to advertising campaigns, are not uncommon.
Contact an FTC defense lawyer if you would like to discuss the Commission’s recent investigations and enforcement actions, or if you are the subject of a local, state attorney general or federal regulatory matter.
Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.
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