FTC Settles Telemarketing Allegations Against Lead Generator

The U.S. District Court for the Central District of California recently issued an order on stipulation between the FTC and a lead generator and its individual owner, over alleged violations of the FTC Act, TCPA, and Telemarketing Sales Rule (TSR) involving telemarketing calls based on invalid consumer consent.  The consent order imposes a $7 million judgment (which was suspended based on financial representations and evidence concerning the defendants’ inability to pay), and a permanent ban from any lead generation activities, along with other requirements.

The lead generator allegedly functioned as a “consent farm” by operating websites designed to induce consumers to provide their personal information and consent to receive certain outbound phone calls for what consumers believed were mortgage refinancing loans and other services.  The lead generator would then allegedly sell the collected leads to other companies who relied upon that consent to contact them regarding various other products and services, such as solar panels, hearing aids, auto warranties, and social security disability services.

The FTC alleges that the lead generator’s false or misleading method of obtaining consumer consent amounted to a deceptive act or practice in violation of the FTC Act and that it did not comport with two TSR requirements: that the consent evidence 1) a willingness to receive prerecorded calls by or on behalf of a specific seller; or 2) an agreement for the seller to place calls by or on behalf of a specific party to numbers on the National Do Not Call Registry (NDNCR).  The FTC also alleges that the lead generator knowingly sold leads used to make illegal telemarketing calls, including calls to numbers registered with the NDNCR.

The consent order, among other things, permanently restrains the company and its owner from making or assisting anyone else in making robocalls or calls to consumers on the NDNCR or collecting, selling, or otherwise disclosing certain consumer information.  The lead generator is also required to destroy certain consumer information it previously collected. 

The lead generator neither admits nor denies the FTC’s allegations.