# UNITED STATES OF AMERICA > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3A063fd350701bd470 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTON, DC 20580 Bureau of Consumer Protection Division of Marketing Practices Lois C. Greisman Associate Director March 27, 2020 VIA PDF EMAIL ATTACHMENT VoIPMax Warning Regarding Assisting and Facilitating Illegal Robocalls Related to Coronavirus/COVID-19 The owners, officers, and employees of VoIPMax: Staff at the Federal Trade Commission (“FTC”) is investigating companies and individuals that may be involved in illegal robocalls capitalizing on the Coronavirus/COVID-19 pandemic. Many of these robocalls prey upon consumer fear of the pandemic to perpetrate scams or disseminate disinformation. FTC staff have reason to believe that one or more of your customers may be involved in such illegal telemarketing campaigns. Please review this letter and the attached documents in detail. By March 30, 2020, please send an email to Ian Barlow and James Evans, attorneys in the FTC’s Division of Marketing Practices, describing the specific actions you have taken to ensure your company’s services are not being used in Coronavirus/COVID-19 robocall schemes. Their email addresses are: ibarlow@ftc.gov and james.evans@ftc.gov. This letter provides information about FTC laws, regulations, and enforcement actions that may bear upon your business activities. In particular, the FTC has previously brought robocall enforcement actions against companies that provided illegal robocallers with Voice over Internet Protocol (“VoIP”) services and access to telephone numbers such as direct inbound dial numbers. The FTC brought these enforcement actions under the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 45, and the Telemarketing Sales Rule (“TSR”), 16 C.F.R. Part 310. The FTC Act prohibits unfair or deceptive acts and practices, and the TSR prohibits deceptive and abusive telemarketing practices, including the use of prerecorded messages. In addition, section 310.3(b) of the TSR prohibits any person from “assisting and facilitating” certain conduct. 1 Under that provision, “it is unlawful for any person or entity to 1 A copy of the TSR is attached as Appendix A. Page 2 provide substantial assistance or support to a seller or telemarketer when that person or entity knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates Sections 310.3(a), (c), or (d), or Section 310.4 of the TSR,” which prohibit, among other conduct, the following: • Making a false or misleading statement to induce any person to pay for goods or services or to induce a charitable contribution (16 C.F.R. § 310.3(a)(4)); • Misrepresenting a seller or telemarketer’s affiliation with any government agency (16 C.F.R. § 310.3(a)(2)(vii)); • Transmitting false or deceptive caller ID numbers (16 C.F.R. § 310.4(a)(8)); • Initiating or causing the initiation of calls that deliver prerecorded messages, unless the person called provided the seller express written permission to call (16 C.F.R. § 310.4(b)(v)); and • Initiating or causing the initiation of telemarketing calls to numbers listed on the National Do Not Call Registry, unless the person called provided express written permission to receive calls from the seller or the seller had an existing business relationship with the person called (16 C.F.R. § 310.4(b)(iii)(B)). The FTC can obtain civil penalties for TSR violations. Each illegal call is subject to a maximum civil penalty of $43,280. See 16 C.F.R. § 1.98(d). In addition, a violation of the TSR is a violation of Section 5 of the FTC Act. See 15 U.S.C. §§ 6102(c), 57a(d)(3), 45(a). Accordingly, the FTC has authority to seek both preliminary and permanent injunctive relief to address violations of the TSR. See 15 U.S.C. § 53(b). The FTC may also seek the refund of money or payment of damages to address violations of the TSR. See 15 U.S.C. § 57b(b). Combatting illegal robocalls is a top priority for the FTC, 2 with a particular focus on robocalls involving Coronavirus/COVID-19. As part of its robocall enforcement efforts, the FTC has brought assisting and facilitating claims against technology companies that knowingly provided software and servers used by illegal robocallers, even though these technology companies did not contract directly with the illegal robocallers. See FTC v. James B. Christiano, No. 8:18-cv-00936 (C.D. Cal. filed May 31, 2018). We also want to bring to your attention that the FTC recently sued a VoIP service provider for allegedly violating the TSR, 16 C.F.R. Part 310. In that case, FTC v. Educare, the FTC alleged that defendant Globex Telecom, Inc. assisted and facilitated telemarketers it knew, or consciously avoided knowing, were violating the TSR’s prohibitions on calls delivering prerecorded messages. See FTC v. Educare Centre Services, Inc., No. 3:19-cv-00196-KC (W.D. Tex. Am. Compl. filed Dec. 3, 2019). 3 2 In fiscal year 2019, the FTC received more than 5.4 million complaints about unwanted calls, including more than 3.7 million robocall complaints. The FTC maintains an interactive Tableau Public web page that publishes details about do not call complaints on a quarterly basis. See public.tableau.com/profile/federal.trade.commission#!/vizhome/DoNotCallComplaints/Maps. 3 A copy of the FTC’s Amended Complaint is attached as Appendix B. Page 3 The FTC has business educational materials that can assist you in complying with the TSR and information about the FTC’s efforts to protect consumers from scams involving Coronavirus/COVID-19. See ftc.gov/tips-advice/business-center/guidance/complyingtelemarketing-sales-rule and ftc.gov/coronavirus. In addition to understanding FTC regulations and the FTC’s December 2019 action against a provider of VoIP services, you should be aware that in January 2020, the United States Department of Justice (“DOJ”) brought two civil actions against VoIP companies and their owners. In those cases, DOJ alleged that the defendants were committing and conspiring to commit wire fraud by knowingly transmitting robocalls that impersonated federal government agencies. See justice.gov/opa/pr/department-justice-files-actions-stop-telecom-carriers-whofacilitated-hundreds-millions. Again, it is important to review this letter and the attached documents in detail. We look forward to receiving your email response by March 30, 2020, describing the specific actions you have taken to ensure your company’s services are not being used in Coronavirus/COVID-19 robocall schemes. As noted above, please send the email to Ian Barlow and James Evans, attorneys in the FTC’s Division of Marketing Practices. You may also contact them with any questions regarding compliance with the FTC Act or the TSR. Their contact information is: Ian Barlow, ibarlow@ftc.gov, 202-326-3120, and James Evans, james.evans@ftc.gov, 202-326-2026. Sincerely, /s/Lois C. Greisman Lois C. Greisman Associate Director Enclosures: Appendix A (TSR) Appendix B (Educare Amended Complaint) Appendix A (Telemarketing Sales Rule) Federal Trade Commission § 310.2 PART 310—TELEMARKETING SALES RULE 16 CFR PART 310 AUTHORITY: 15 U.S.C. 6101–6108. SOURCE: 75 FR 48516, Aug. 10, 2010, unless otherwise noted. § 310.2 Definitions. (a) Acquirer means a business organization, financial institution, or an agent of a business organization or financial institution that has authority from an organization that operates or licenses a credit card system to authorize merchants to accept, transmit, or process payment by credit card through the credit card system for money, goods or services, or anything else of value. 381 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00391 EC29SE91.044 kpayne on DSK54DXVN1OFR with $$_JOB Sec. 310.1 Scope of regulations in this part. 310.2 Definitions. 310.3 Deceptive telemarketing acts or practices. 310.4 Abusive telemarketing acts or practices. 310.5 Recordkeeping requirements. 310.6 Exemptions. 310.7 Actions by states and private persons. 310.8 Fee for access to the National Do Not Call Registry. 310.9 Severability. § 310.1 Scope of regulations in this part. This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 61016108, as amended. kpayne on DSK54DXVN1OFR with $$_JOB § 310.2 16 CFR Ch. I (1–1–18 Edition) (b) Attorney General means the chief legal officer of a state. (c) Billing information means any data that enables any person to access a customer’s or donor’s account, such as a credit card, checking, savings, share or similar account, utility bill, mortgage loan account, or debit card. (d) Caller identification service means a service that allows a telephone subscriber to have the telephone number, and, where available, name of the calling party transmitted contemporaneously with the telephone call, and displayed on a device in or connected to the subscriber’s telephone. (e) Cardholder means a person to whom a credit card is issued or who is authorized to use a credit card on behalf of or in addition to the person to whom the credit card is issued. (f) Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash received from one person to another person in a different location that is sent by a money transfer provider and received in the form of cash. For purposes of this definition, money transfer provider means any person or financial institution that provides cash-to-cash money transfers for a person in the normal course of its business, whether or not the person holds an account with such person or financial institution. The term cash-to-cash money transfer includes a remittance transfer, as defined in section 919(g)(2) of the Electronic Fund Transfer Act (‘‘EFTA’’), 15 U.S.C. 1693a, that is a cash-to-cash transaction; however it does not include any transaction that is: (1) An electronic fund transfer as defined in section 903 of the EFTA; (2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift cards; or (3) Subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq. (g) Cash reload mechanism is a device, authorization code, personal identification number, or other security measure that makes it possible for a person to convert cash into an electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) form that can be used to add funds to a general-use prepaid card, as defined in Regulation E, 12 CFR 1005.2, or an account with a payment intermediary. For purposes of this definition, a cash reload mechanism is not itself a general-use prepaid debit card or a swipe reload process or similar method in which funds are added directly onto a person’s own general-use prepaid card or account with a payment intermediary. (h) Charitable contribution means any donation or gift of money or any other thing of value. (i) Commission means the Federal Trade Commission. (j) Credit means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment. (k) Credit card means any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, property, labor, or services on credit. (l) Credit card sales draft means any record or evidence of a credit card transaction. (m) Credit card system means any method or procedure used to process credit card transactions involving credit cards issued or licensed by the operator of that system. (n) Customer means any person who is or may be required to pay for goods or services offered through telemarketing. (o) Debt relief service means any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector. (p) Donor means any person solicited to make a charitable contribution. (q) Established business relationship means a relationship between a seller and a consumer based on: (1) the consumer’s purchase, rental, or lease of the seller’s goods or services or a financial transaction between the 382 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00392 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.2 consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or (2) the consumer’s inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call. (r) Free-to-pay conversion means, in an offer or agreement to sell or provide any goods or services, a provision under which a customer receives a product or service for free for an initial period and will incur an obligation to pay for the product or service if he or she does not take affirmative action to cancel before the end of that period. (s) Investment opportunity means anything, tangible or intangible, that is offered, offered for sale, sold, or traded based wholly or in part on representations, either express or implied, about past, present, or future income, profit, or appreciation. (t) Material means likely to affect a person’s choice of, or conduct regarding, goods or services or a charitable contribution. (u) Merchant means a person who is authorized under a written contract with an acquirer to honor or accept credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution. (v) Merchant agreement means a written contract between a merchant and an acquirer to honor or accept credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution. (w) Negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer. (x) Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution. (y) Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity. (z) Preacquired account information means any information that enables a seller or telemarketer to cause a charge to be placed against a customer’s or donor’s account without obtaining the account number directly from the customer or donor during the telemarketing transaction pursuant to which the account will be charged. (aa) Prize means anything offered, or purportedly offered, and given, or purportedly given, to a person by chance. For purposes of this definition, chance exists if a person is guaranteed to receive an item and, at the time of the offer or purported offer, the telemarketer does not identify the specific item that the person will receive. (bb) Prize promotion means: (1) A sweepstakes or other game of chance; or (2) An oral or written express or implied representation that a person has won, has been selected to receive, or may be eligible to receive a prize or purported prize. (cc) Remotely created payment order means any payment instruction or order drawn on a person’s account that is created by the payee or the payee’s agent and deposited into or cleared through the check clearing system. The term includes, without limitation, a ‘‘remotely created check,’’ as defined in Regulation CC, Availability of Funds and Collection of Checks, 12 CFR 229.2(fff), but does not include a payment order cleared through an Automated Clearinghouse (ACH) Network or subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 1026. (dd) Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration. (ee) State means any state of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, and any territory or possession of the United States. (ff) Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. (gg) Telemarketing means a plan, program, or campaign which is conducted 383 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00393 § 310.3 16 CFR Ch. I (1–1–18 Edition) to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term ‘‘further solicitation’’ does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer’s call or in a substantially similar catalog. (hh) Upselling means soliciting the purchase of goods or services following an initial transaction during a single telephone call. The upsell is a separate telemarketing transaction, not a continuation of the initial transaction. An ‘‘external upsell’’ is a solicitation made by or on behalf of a seller different from the seller in the initial transaction, regardless of whether the initial transaction and the subsequent solicitation are made by the same telemarketer. An ‘‘internal upsell’’ is a solicitation made by or on behalf of the same seller as in the initial transaction, regardless of whether the initial transaction and subsequent solicitation are made by the same telemarketer. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77557, Dec. 14, 2015] kpayne on DSK54DXVN1OFR with $$_JOB § 310.3 Deceptive telemarketing acts or practices. (a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engage in the following conduct: (1) Before a customer consents to pay 659 for goods or services offered, failing to disclose truthfully, in a clear and conspicuous manner, the following material information: (i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer; 660 (ii) All material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer; (iii) If the seller has a policy of not making refunds, cancellations, exchanges, or repurchases, a statement informing the customer that this is the seller’s policy; or, if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy; (iv) In any prize promotion, the odds of being able to receive the prize, and, if the odds are not calculable in advance, the factors used in calculating the odds; that no purchase or payment is required to win a prize or to participate in a prize promotion and that any purchase or payment will not increase the person’s chances of winning; and the no-purchase/no-payment method of participating in the prize promotion with either instructions on how to participate or an address or local or tollfree telephone number to which customers may write or call for information on how to participate; 659 When a seller or telemarketer uses, or directs a customer to use, a courier to transport payment, the seller or telemarketer must make the disclosures required by § 310.3(a)(1) before sending a courier to pick up payment or authorization for payment, or directing a customer to have a courier pick up payment or authorization for payment. In the case of debt relief services, the seller or telemarketer must make the disclosures required by § 310.3(a)(1) before the consumer enrolls in an offered program. 660 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, compliance with the disclosure requirements under the Truth in Lending Act and Regulation Z shall constitute compliance with § 310.3(a)(1)(i) of this Rule. 384 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00394 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.3 (v) All material costs or conditions to receive or redeem a prize that is the subject of the prize promotion; (vi) In the sale of any goods or services represented to protect, insure, or otherwise limit a customer’s liability in the event of unauthorized use of the customer’s credit card, the limits on a cardholder’s liability for unauthorized use of a credit card pursuant to 15 U.S.C. 1643; (vii) If the offer includes a negative option feature, all material terms and conditions of the negative option feature, including, but not limited to, the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s); and (viii) In the sale of any debt relief service: (A) the amount of time necessary to achieve the represented results, and to the extent that the service may include a settlement offer to any of the customer’s creditors or debt collectors, the time by which the debt relief service provider will make a bona fide settlement offer to each of them; (B) to the extent that the service may include a settlement offer to any of the customer’s creditors or debt collectors, the amount of money or the percentage of each outstanding debt that the customer must accumulate before the debt relief service provider will make a bona fide settlement offer to each of them; (C) to the extent that any aspect of the debt relief service relies upon or results in the customer’s failure to make timely payments to creditors or debt collectors, that the use of the debt relief service will likely adversely affect the customer’s creditworthiness, may result in the customer being subject to collections or sued by creditors or debt collectors, and may increase the amount of money the customer owes due to the accrual of fees and interest; and (D) to the extent that the debt relief service requests or requires the customer to place funds in an account at an insured financial institution, that the customer owns the funds held in the account, the customer may withdraw from the debt relief service at any time without penalty, and, if the customer withdraws, the customer must receive all funds in the account, other than funds earned by the debt relief service in compliance with § 310.4(a)(5)(i)(A) through (C). (2) Misrepresenting, directly or by implication, in the sale of goods or services any of the following material information: (i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of a sales offer; (ii) Any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer; (iii) Any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer; (iv) Any material aspect of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies; (v) Any material aspect of a prize promotion including, but not limited to, the odds of being able to receive a prize, the nature or value of a prize, or that a purchase or payment is required to win a prize or to participate in a prize promotion; (vi) Any material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability; (vii) A seller’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity; (viii) That any customer needs offered goods or services to provide protections a customer already has pursuant to 15 U.S.C. 1643; (ix) Any material aspect of a negative option feature including, but not limited to, the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s); or 385 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00395 § 310.3 16 CFR Ch. I (1–1–18 Edition) kpayne on DSK54DXVN1OFR with $$_JOB (x) Any material aspect of any debt relief service, including, but not limited to, the amount of money or the percentage of the debt amount that a customer may save by using such service; the amount of time necessary to achieve the represented results; the amount of money or the percentage of each outstanding debt that the customer must accumulate before the provider of the debt relief service will initiate attempts with the customer’s creditors or debt collectors or make a bona fide offer to negotiate, settle, or modify the terms of the customer’s debt; the effect of the service on a customer’s creditworthiness; the effect of the service on collection efforts of the customer’s creditors or debt collectors; the percentage or number of customers who attain the represented results; and whether a debt relief service is offered or provided by a non-profit entity. (3) Causing billing information to be submitted for payment, or collecting or attempting to collect payment for goods or services or a charitable contribution, directly or indirectly, without the customer’s or donor’s express verifiable authorization, except when the method of payment used is a credit card subject to protections of the Truth in Lending Act and Regulation Z,661 or a debit card subject to the protections of the Electronic Fund Transfer Act and Regulation E.662 Such authorization shall be deemed verifiable if any of the following means is employed: (i) Express written authorization by the customer or donor, which includes the customer’s or donor’s signature;663 (ii) Express oral authorization which is audio-recorded and made available upon request to the customer or donor, and the customer’s or donor’s bank or other billing entity, and which evidences clearly both the customer’s or 661 Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 226. 662 Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., and Regulation E, 12 CFR part 205. 663 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. donor’s authorization of payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction and the customer’s or donor’s receipt of all of the following information: (A) An accurate description, clearly and conspicuously stated, of the goods or services or charitable contribution for which payment authorization is sought; (B) The number of debits, charges, or payments (if more than one); (C) The date(s) the debit(s), charge(s), or payment(s) will be submitted for payment; (D) The amount(s) of the debit(s), charge(s), or payment(s); (E) The customer’s or donor’s name; (F) The customer’s or donor’s billing information, identified with sufficient specificity such that the customer or donor understands what account will be used to collect payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction; (G) A telephone number for customer or donor inquiry that is answered during normal business hours; and (H) The date of the customer’s or donor’s oral authorization; or (iii) Written confirmation of the transaction, identified in a clear and conspicuous manner as such on the outside of the envelope, sent to the customer or donor via first class mail prior to the submission for payment of the customer’s or donor’s billing information, and that includes all of the information contained in §§ 310.3(a)(3)(ii)(A)-(G) and a clear and conspicuous statement of the procedures by which the customer or donor can obtain a refund from the seller or telemarketer or charitable organization in the event the confirmation is inaccurate; provided, however, that this means of authorization shall not be deemed verifiable in instances in which goods or services are offered in a transaction involving a free-to-pay conversion and preacquired account information. (4) Making a false or misleading statement to induce any person to pay for goods or services or to induce a charitable contribution. 386 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00396 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 (b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates §§ 310.3(a), (c) or (d), or § 310.4 of this Rule. (c) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a deceptive telemarketing act or practice and a violation of this Rule for: (1) A merchant to present to or deposit into, or cause another to present to or deposit into, the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; (2) Any person to employ, solicit, or otherwise cause a merchant, or an employee, representative, or agent of the merchant, to present to or deposit into the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; or (3) Any person to obtain access to the credit card system through the use of a business relationship or an affiliation with a merchant, when such access is not authorized by the merchant agreement or the applicable credit card system. (d) Prohibited deceptive acts or practices in the solicitation of charitable contributions. It is a fraudulent charitable solicitation, a deceptive telemarketing act or practice, and a violation of this Rule for any telemarketer soliciting charitable contributions to misrepresent, directly or by implication, any of the following material information: (1) The nature, purpose, or mission of any entity on behalf of which a charitable contribution is being requested; (2) That any charitable contribution is tax deductible in whole or in part; (3) The purpose for which any charitable contribution will be used; (4) The percentage or amount of any charitable contribution that will go to a charitable organization or to any particular charitable program; (5) Any material aspect of a prize promotion including, but not limited to: the odds of being able to receive a prize; the nature or value of a prize; or that a charitable contribution is required to win a prize or to participate in a prize promotion; or (6) A charitable organization’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77558, Dec. 14, 2015] § 310.4 Abusive telemarketing acts or practices. (a) Abusive conduct generally. It is an abusive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engage in the following conduct: (1) Threats, intimidation, or the use of profane or obscene language; (2) Requesting or receiving payment of any fee or consideration for goods or services represented to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating until: (i) The time frame in which the seller has represented all of the goods or services will be provided to that person has expired; and (ii) The seller has provided the person with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved. Nothing in this Rule should be construed to affect the requirement in the Fair Credit Reporting Act, 15 U.S.C. 1681, that a consumer report may only be obtained for a specified permissible purpose; (3) Requesting or receiving payment of any fee or consideration from a person for goods or services represented to recover or otherwise assist in the return of money or any other item of value paid for by, or promised to, that person in a previous transaction, until seven (7) business days after such money or other item is delivered to that person. This provision shall not 387 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00397 kpayne on DSK54DXVN1OFR with $$_JOB § 310.4 16 CFR Ch. I (1–1–18 Edition) apply to goods or services provided to a person by a licensed attorney; (4) Requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan or other extension of credit for a person; (5)(i) Requesting or receiving payment of any fee or consideration for any debt relief service until and unless: (A) The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt management plan, or other such valid contractual agreement executed by the customer; (B) The customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and the creditor or debt collector; and (C) To the extent that debts enrolled in a service are renegotiated, settled, reduced, or otherwise altered individually, the fee or consideration either: (1) Bears the same proportional relationship to the total fee for renegotiating, settling, reducing, or altering the terms of the entire debt balance as the individual debt amount bears to the entire debt amount. The individual debt amount and the entire debt amount are those owed at the time the debt was enrolled in the service; or (2) Is a percentage of the amount saved as a result of the renegotiation, settlement, reduction, or alteration. The percentage charged cannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time the debt was enrolled in the service and the amount actually paid to satisfy the debt. (ii) Nothing in § 310.4(a)(5)(i) prohibits requesting or requiring the customer to place funds in an account to be used for the debt relief provider’s fees and for payments to creditors or debt collectors in connection with the renegotiation, settlement, reduction, or other alteration of the terms of payment or other terms of a debt, provided that: (A) The funds are held in an account at an insured financial institution; (B) The customer owns the funds held in the account and is paid accrued interest on the account, if any; (C) The entity administering the account is not owned or controlled by, or in any way affiliated with, the debt relief service; (D) The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving the debt relief service; and (E) The customer may withdraw from the debt relief service at any time without penalty, and must receive all funds in the account, other than funds earned by the debt relief service in compliance with § 310.4(a)(5)(i)(A) through (C), within seven (7) business days of the customer’s request. (6) Disclosing or receiving, for consideration, unencrypted consumer account numbers for use in telemarketing; provided, however, that this paragraph shall not apply to the disclosure or receipt of a customer’s or donor’s billing information to process a payment for goods or services or a charitable contribution pursuant to a transaction; (7) Causing billing information to be submitted for payment, directly or indirectly, without the express informed consent of the customer or donor. In any telemarketing transaction, the seller or telemarketer must obtain the express informed consent of the customer or donor to be charged for the goods or services or charitable contribution and to be charged using the identified account. In any telemarketing transaction involving preacquired account information, the requirements in paragraphs (a)(7)(i) through (ii) of this section must be met to evidence express informed consent. (i) In any telemarketing transaction involving preacquired account information and a free-to-pay conversion feature, the seller or telemarketer must: (A) Obtain from the customer, at a minimum, the last four (4) digits of the account number to be charged; (B) Obtain from the customer his or her express agreement to be charged for the goods or services and to be 388 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00398 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 charged using the account number pursuant to paragraph (a)(7)(i)(A) of this section; and, (C) Make and maintain an audio recording of the entire telemarketing transaction. (ii) In any other telemarketing transaction involving preacquired account information not described in paragraph (a)(7)(i) of this section, the seller or telemarketer must: (A) At a minimum, identify the account to be charged with sufficient specificity for the customer or donor to understand what account will be charged; and (B) Obtain from the customer or donor his or her express agreement to be charged for the goods or services and to be charged using the account number identified pursuant to paragraph (a)(7)(ii)(A) of this section; (8) Failing to transmit or cause to be transmitted the telephone number, and, when made available by the telemarketer’s carrier, the name of the telemarketer, to any caller identification service in use by a recipient of a telemarketing call; provided that it shall not be a violation to substitute (for the name and phone number used in, or billed for, making the call) the name of the seller or charitable organization on behalf of which a telemarketing call is placed, and the seller’s or charitable organization’s customer or donor service telephone number, which is answered during regular business hours; (9) Creating or causing to be created, directly or indirectly, a remotely created payment order as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or sought through telemarketing; or (10) Accepting from a customer or donor, directly or indirectly, a cash-tocash money transfer or cash reload mechanism as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or sought through telemarketing. (b) Pattern of calls. (1) It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller to cause a telemarketer to engage in, the following conduct: (i) Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number; (ii) Denying or interfering in any way, directly or indirectly, with a person’s right to be placed on any registry of names and/or telephone numbers of persons who do not wish to receive outbound telephone calls established to comply with paragraph (b)(1)(iii)(A) of this section, including, but not limited to, harassing any person who makes such a request; hanging up on that person; failing to honor the request; requiring the person to listen to a sales pitch before accepting the request; assessing a charge or fee for honoring the request; requiring a person to call a different number to submit the request; and requiring the person to identify the seller making the call or on whose behalf the call is made; (iii) Initiating any outbound telephone call to a person when: (A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or (B) That person’s telephone number is on the ‘‘do-not-call’’ registry, maintained by the Commission, of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller or telemarketer: (1) Can demonstrate that the seller has obtained the express agreement, in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person’s authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature 664 of that person; or 664 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a 389 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00399 Continued § 310.4 16 CFR Ch. I (1–1–18 Edition) kpayne on DSK54DXVN1OFR with $$_JOB (2) Can demonstrate that the seller has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or (iv) Abandoning any outbound telephone call. An outbound telephone call is ‘‘abandoned’’ under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person’s completed greeting. (v) Initiating any outbound telephone call that delivers a prerecorded message, other than a prerecorded message permitted for compliance with the call abandonment safe harbor in § 310.4(b)(4)(iii), unless: (A) In any such call to induce the purchase of any good or service, the seller has obtained from the recipient of the call an express agreement, in writing, that: (i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person; (ii) The seller obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service; (iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller; and (iv) Includes such person’s telephone number and signature;665 and (B) In any such call to induce the purchase of any good or service, or to induce a charitable contribution from a member of, or previous donor to, a nonprofit charitable organization on whose behalf the call is made, the seller or telemarketer: (i) Allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; and valid signature under applicable federal law or state contract law. 665 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. (ii) Within two (2) seconds after the completed greeting of the person called, plays a prerecorded message that promptly provides the disclosures required by § 310.4(d) or (e), followed immediately by a disclosure of one or both of the following: (A) In the case of a call that could be answered in person by a consumer, that the person called can use an automated interactive voice and/or keypress-activated opt-out mechanism to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A) at any time during the message. The mechanism must: (1) Automatically add the number called to the seller’s entity-specific Do Not Call list; (2) Once invoked, immediately disconnect the call; and (3) Be available for use at any time during the message; and (B) In the case of a call that could be answered by an answering machine or voicemail service, that the person called can use a toll-free telephone number to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A). The number provided must connect directly to an automated interactive voice or keypress-activated opt-out mechanism that: (1) Automatically adds the number called to the seller’s entity-specific Do Not Call list; (2) Immediately thereafter disconnects the call; and (3) Is accessible at any time throughout the duration of the telemarketing campaign; and (iii) Complies with all other requirements of this part and other applicable federal and state laws. (C) Any call that complies with all applicable requirements of this paragraph (v) shall not be deemed to violate § 310.4(b)(1)(iv) of this part. (D) This paragraph (v) shall not apply to any outbound telephone call that delivers a prerecorded healthcare message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in the HIPAA Privacy Rule, 45 CFR 160.103. (2) It is an abusive telemarketing act or practice and a violation of this Rule for any person to sell, rent, lease, purchase, or use any list established to comply with § 310.4(b)(1)(iii)(A), or 390 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00400 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 maintained by the Commission pursuant to § 310.4(b)(1)(iii)(B), for any purpose except compliance with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on such lists. (3) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the seller’s or telemarketer’s routine business practice: (i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii); (ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to § 310.4(b)(3)(i); (iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable organization, has maintained and recorded a list of telephone numbers the seller or charitable organization may not contact, in compliance with § 310.4(b)(1)(iii)(A); (iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version of the ‘‘do-not-call’’ registry obtained from the Commission no more than thirty-one (31) days prior to the date any call is made, and maintains records documenting this process; (v) The seller or a telemarketer or another person acting on behalf of the seller or charitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i); and (vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or (iii) of this section is the result of error and not of failure to obtain any information necessary to comply with a request pursuant to paragraph (b)(1)(iii)(A) of this section not to receive further calls by or on behalf of a seller or charitable organization. (4) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(iv) if: (i) The seller or telemarketer employs technology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30- day period or portion thereof that the campaign continues. (ii) The seller or telemarketer, for each telemarketing call placed, allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; (iii) Whenever a sales representative is not available to speak with the person answering the call within two (2) seconds after the person’s completed greeting, the seller or telemarketer promptly plays a recorded message that states the name and telephone number of the seller on whose behalf the call was placed666; and (iv) The seller or telemarketer, in accordance with § 310.5(b)-(d), retains records establishing compliance with § 310.4(b)(4)(i)-(iii). (c) Calling time restrictions. Without the prior consent of a person, it is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in outbound telephone calls to a person’s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person’s location. (d) Required oral disclosures in the sale of goods or services. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer in an outbound telephone call or internal or external upsell to induce the purchase of goods or services to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the following information: (1) The identity of the seller; (2) That the purpose of the call is to sell goods or services; (3) The nature of the goods or services; and (4) That no purchase or payment is necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered and that any purchase or payment will not increase the person’s chances of winning. This disclosure must be made before or in conjunction with the description of the prize to the person called. If requested 666 This provision does not affect any seller’s or telemarketer’s obligation to comply with relevant state and federal laws, including but not limited to the TCPA, 47 U.S.C. 227, and 47 CFR part 64.1200. 391 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00401 § 310.5 16 CFR Ch. I (1–1–18 Edition) by that person, the telemarketer must disclose the no-purchase/no-payment entry method for the prize promotion; provided, however, that, in any internal upsell for the sale of goods or services, the seller or telemarketer must provide the disclosures listed in this section only to the extent that the information in the upsell differs from the disclosures provided in the initial telemarketing transaction. (e) Required oral disclosures in charitable solicitations. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer, in an outbound telephone call to induce a charitable contribution, to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the following information: (1) The identity of the charitable organization on behalf of which the request is being made; and (2) That the purpose of the call is to solicit a charitable contribution. [75 FR 48516, Aug. 10, 2010, as amended at 76 FR 58716, Sept. 22, 2011; 80 FR 77559, Dec. 14, 2015] § 310.5 Recordkeeping requirements. (a) Any seller or telemarketer shall keep, for a period of 24 months from the date the record is produced, the following records relating to its telemarketing activities: (1) All substantially different advertising, brochures, telemarketing scripts, and promotional materials; (2) The name and last known address of each prize recipient and the prize awarded for prizes that are represented, directly or by implication, to have a value of $25.00 or more; (3) The name and last known address of each customer, the goods or services purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services;667 (4) The name, any fictitious name used, the last known home address and kpayne on DSK54DXVN1OFR with $$_JOB 667 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, compliance with the recordkeeping requirements under the Truth in Lending Act, and Regulation Z, shall constitute compliance with § 310.5(a)(3) of this Rule. telephone number, and the job title(s) for all current and former employees directly involved in telephone sales or solicitations; provided, however, that if the seller or telemarketer permits fictitious names to be used by employees, each fictitious name must be traceable to only one specific employee; and (5) All verifiable authorizations or records of express informed consent or express agreement required to be provided or received under this Rule. (b) A seller or telemarketer may keep the records required by § 310.5(a) in any form, and in the same manner, format, or place as they keep such records in the ordinary course of business. Failure to keep all records required by § 310.5(a) shall be a violation of this Rule. (c) The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate responsibility between themselves for the recordkeeping required by this Section. When a seller and telemarketer have entered into such an agreement, the terms of that agreement shall govern, and the seller or telemarketer, as the case may be, need not keep records that duplicate those of the other. If the agreement is unclear as to who must maintain any required record(s), or if no such agreement exists, the seller shall be responsible for complying with §§ 310.5(a)(1)-(3) and (5); the telemarketer shall be responsible for complying with § 310.5(a)(4). (d) In the event of any dissolution or termination of the seller’s or telemarketer’s business, the principal of that seller or telemarketer shall maintain all records as required under this section. In the event of any sale, assignment, or other change in ownership of the seller’s or telemarketer’s business, the successor business shall maintain all records required under this section. § 310.6 Exemptions. (a) Solicitations to induce charitable contributions via outbound telephone calls are not covered by § 310.4(b)(1)(iii)(B) of this Rule. (b) The following acts or practices are exempt from this Rule: 392 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00402 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.7 (1) The sale of pay-per-call services subject to the Commission’s Rule entitled ‘‘Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992,’’ 16 CFR part 308, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (2) The sale of franchises subject to the Commission’s Rule entitled ‘‘Disclosure Requirements and Prohibitions Concerning Franchising,’’ (‘‘Franchise Rule’’) 16 CFR part 436, and the sale of business opportunities subject to the Commission’s Rule entitled ‘‘Disclosure Requirements and Prohibitions Concerning Business Opportunities,’’ (‘‘Business Opportunity Rule’’) 16 CFR part 437, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (3) Telephone calls in which the sale of goods or services or charitable solicitation is not completed, and payment or authorization of payment is not required, until after a face-to-face sales or donation presentation by the seller or charitable organization, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (4) Telephone calls initiated by a customer or donor that are not the result of any solicitation by a seller, charitable organization, or telemarketer, provided, however, that this exemption does not apply to any instances of upselling included in such telephone calls; (5) Telephone calls initiated by a customer or donor in response to an advertisement through any medium, other than direct mail solicitation, provided, however, that this exemption does not apply to: (i) Calls initiated by a customer or donor in response to an advertisement relating to investment opportunities, debt relief services, business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or advertisements involving offers for goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4); (ii) The requirements of § 310.4(a)(9) or (10); or (iii) Any instances of upselling included in such telephone calls; (6) Telephone calls initiated by a customer or donor in response to a direct mail solicitation, including solicitations via the U.S. Postal Service, facsimile transmission, electronic mail, and other similar methods of delivery in which a solicitation is directed to specific address(es) or person(s), that clearly, conspicuously, and truthfully discloses all material information listed in § 310.3(a)(1), for any goods or services offered in the direct mail solicitation, and that contains no material misrepresentation regarding any item contained in § 310.3(d) for any requested charitable contribution; provided, however, that this exemption does not apply to: (i) Calls initiated by a customer in response to a direct mail solicitation relating to prize promotions, investment opportunities, debt relief services, business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4); (ii) The requirements of § 310.4(a)(9) or (10); or (iii) Any instances of upselling included in such telephone calls; and (7) Telephone calls between a telemarketer and any business to induce the purchase of goods or services or a charitable contribution by the business, except calls to induce the retail sale of nondurable office or cleaning supplies; provided, however, that §§ 310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or telemarketers of nondurable office or cleaning supplies. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77559, Dec. 14, 2015] § 310.7 Actions by states and private persons. (a) Any attorney general or other officer of a state authorized by the state to bring an action under the Telemarketing and Consumer Fraud and Abuse Prevention Act, and any private person who brings an action under that Act, shall serve written notice of its action on the Commission, if feasible, prior to its initiating an action under this Rule. The notice shall be sent to 393 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00403 § 310.8 16 CFR Ch. I (1–1–18 Edition) the Office of the Director, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580, and shall include a copy of the state’s or private person’s complaint and any other pleadings to be filed with the court. If prior notice is not feasible, the state or private person shall serve the Commission with the required notice immediately upon instituting its action. (b) Nothing contained in this Section shall prohibit any attorney general or other authorized state official from proceeding in state court on the basis of an alleged violation of any civil or criminal statute of such state. kpayne on DSK54DXVN1OFR with $$_JOB § 310.8 Fee for access to the National Do Not Call Registry. (a) It is a violation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an outbound telephone call to any person whose telephone number is within a given area code unless such seller, either directly or through another person, first has paid the annual fee, required by § 310.8(c), for access to telephone numbers within that area code that are included in the National Do Not Call Registry maintained by the Commission under § 310.4(b)(1)(iii)(B); provided, however, that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the seller does not access the National Do Not Call Registry for any other purpose. (b) It is a violation of this Rule for any telemarketer, on behalf of any seller, to initiate an outbound telephone call to any person whose telephone number is within a given area code unless that seller, either directly or through another person, first has paid the annual fee, required by § 310.8(c), for access to the telephone numbers within that area code that are included in the National Do Not Call Registry; provided, however, that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the seller does not access the National Do Not Call Registry for any other purpose. (c) The annual fee, which must be paid by any person prior to obtaining access to the National Do Not Call Registry, is $62 for each area code of data accessed, up to a maximum of $17,021; provided, however, that there shall be no charge to any person for accessing the first five area codes of data, and provided further, that there shall be no charge to any person engaging in or causing others to engage in outbound telephone calls to consumers and who is accessing area codes of data in the National Do Not Call Registry if the person is permitted to access, but is not required to access, the National Do Not Call Registry under this Rule, 47 CFR 64.1200, or any other Federal regulation or law. No person may participate in any arrangement to share the cost of accessing the National Do Not Call Registry, including any arrangement with any telemarketer or service provider to divide the costs to access the registry among various clients of that telemarketer or service provider. (d) Each person who pays, either directly or through another person, the annual fee set forth in paragraph (c) of this section, each person excepted under paragraph (c) from paying the annual fee, and each person excepted from paying an annual fee under § 310.4(b)(1)(iii)(B), will be provided a unique account number that will allow that person to access the registry data for the selected area codes at any time for the twelve month period beginning on the first day of the month in which the person paid the fee (‘‘the annual period’’). To obtain access to additional area codes of data during the first six months of the annual period, each person required to pay the fee under paragraph (c) of this section must first pay $62 for each additional area code of data not initially selected. To obtain access to additional area codes of data during the second six months of the annual period, each person required to pay the fee under paragraph (c) of this section must first pay $31 for each additional area code of data not initially selected. The payment of the additional fee will permit the person to access the additional area codes of data for the remainder of the annual period. 394 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00404 Federal Trade Commission § 311.4 (e) Access to the National Do Not Call Registry is limited to telemarketers, sellers, others engaged in or causing others to engage in telephone calls to consumers, service providers acting on behalf of such persons, and any government agency that has law enforcement authority. Prior to accessing the National Do Not Call Registry, a person must provide the identifying information required by the operator of the registry to collect the fee, and must certify, under penalty of law, that the person is accessing the registry solely to comply with the provisions of this Rule or to otherwise prevent telephone calls to telephone numbers on the registry. If the person is accessing the registry on behalf of sellers, that person also must identify each of the sellers on whose behalf it is accessing the registry, must provide each seller’s unique account number for access to the national registry, and must certify, under penalty of law, that the sellers will be using the information gathered from the registry solely to comply with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on the registry. [75 FR 48516, Aug. 10, 2010; 75 FR 51934, Aug. 24, 2010, as amended at 77 FR 51697, Aug. 27, 2012; 78 FR 53643, Aug. 30, 2013; 79 FR 51478, Aug. 29, 2014; 80 FR 77560, Dec. 14, 2016; 81 FR 59845, Aug. 31, 2016; 82 FR 39534, Aug. 21, 2017] kpayne on DSK54DXVN1OFR with $$_JOB § 310.9 Severability. The provisions of this Rule are separate and severable from one another. If any provision is stayed or determined to be invalid, it is the Commission’s intention that the remaining provisions shall continue in effect. 395 VerDate Sep2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00405 Appendix B (Educare Amended Complaint) Qf'Pf..·tVtU ~!~½n.9-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 1 of 39 OEC 0·2 20,9 . ' ..,1..\:RK­ . · .,{ cfFTfXAS I UNITED STA'rES DISTRICJ' COURT WESTERN DISTRICT OP TEXAS I1edctal Trade Co,cnmission, and 3 4 State of Ohio ex rel ,Attomey (;eneml Dave :Yost, 5 6 7 8 9 10 lJ No. 3:19-CV-196 .. •,·• Plaintiffs, FIRST AMENDED COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF v. :Edtic:ate"Centre ·s ervices, Inc., a New Jersey cotporation, also dbP. Credit Cat:d Services, Card Services, Credit C~rd Financial Services, Care Net, Tripletcl Inc., Revit Educ Srvc, L.L. Vision, Care Value Services, and Card Value Services, Tripletel, Inc., a Delawaxe corporation, 12 13 14 Prolink Vision, S.R.L:, a Dominican · Republic limited liability company, 15 9896988 Canada Inc., a Canadian company, 16 Globex Telecom, Inc., a Nevada corporation, 17 18 19 20 9506276 Canada, Inc., dba Globex Telecom, Inc., a Canadian company, Sam Madi, individually and as an owner, officer, member, and/ or manager of Educate Centre Services, Inc., 21 22 23 24 25 26 27 28 Mohammad Souheil a/ k/ a Mohammed Souheil and Mike Souheil, individually and as an owner, officet, member, and/ o.r manager of E ducare Centre Services, Inc., 9896988 Canada, Inc., Globex Telecom, Inc., 9506276 Canada, Inc., and Prolink Vision, S.R.L., Wissam Abedel Jalil a / k / a Sam Jalll, individually and as an owner, officer, tnembet, and/ or manager of Tripletel, Inc., and Prolink Vision, S.R.L, 1 .. ";· ,. Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 Charles Kharouf, individually and as an 2 owner, officer, member, and/ or manager of Educate Centre Services, Inc., and 3 1>ro1ink Vision, S.R.L., 4 Filed 12/03/19 Page 2 of 39 Defendants. 5 6 7 8 9 IO Plaintiffs, the Federal Trade Commission ("FTC") and the Smte of Ohio, for their First Amended Complaint ("FA Complaint") allege: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act ("FTC Act''), 15 U.S.C. §§ 53(b), 57b, and the Telemarketing and Consutnet 11 Fraud and Abuse Prevention Act ("Telemarketing Act''), 15 U.S.C. §§ 6101 -6108, to obtain 12 13 temporary, preliminary, and permanent injunctive relief, rescission or reformation of 14 conl:J:acts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, the 15 appointment of a receiver, an asset freeze, and other equitable relief for Defendants' acts or 16 practices in ,,io1ation of Section S(a) of the FTC Act, 15 U.S.C. § 4S(a), and in violation of 17 the FTC's Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310. 18 19 20 2. The State of Ohio, by and through its Attorney General, Dave Yost, brings this action pursuant to the Telemarketing Act, 15 U.S.C. § 6103, the Ohio Consumer Sales 21 Practices Act ("CSPA''), 0.R.C. 1345.07, and the Ohio Telephone Solicitation Sales Act 22 ("TSSA"), O.R.C. 4719.01 et seq., in order to obtain temporary, preliminary, and permanent 23 injunctive relief, consumer damages, and other equit:able relief from Defendants. 24 JURISDICTION AND VENUE 25 26 27 3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1367. 28 2 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 4. Venue is proper in this ilisttict under 28 U.S.C. § 1391 (b)(2), (b)(3), ru1d (c), and 15 U.S.C. § 53(b). SUMMARY OF THE CASE 3 4 5 6 Filed 12/03/19 Page 3 of 39 5. Si.nee at least Feb11.1ary 2016, Satn Maili, Mohammad Souheil (a/k/a l\fohanuned Souheil and Mike Souheil) ("Souheil"), Wissam Abedel Jalil (a/k/a Sam Jalil), Charles I the three-way calls that the Educare Defendants' 128. telemarketets initiate with the consumers and the credit card issuing banks do not lead to the ptomised substantial interest rate reduction, if any at all. 6 129. In numerous instances, the Educate Defendants use the information they 7 8 obtain from consumers to 11pply on behalf of consumers, or advise the consumer to apply, 9 for new credit cards with low introductory rates (commonly known as "teaser rates") and 10 transfer their existing qedit card balances to those new cards. 11 12 For example, an Educare Defendants' telemarketer promised a consumer a 130. new credit card with a 0% APR for 1 year and a 6.99% fixed tate theteafter, but the 13 consumer actually received a new credit card with a 0% APR for 9 months and over 20% 14 15 16 17 18 19 APR thereafter. 131. In some instances, Educate Defendants' tele1m1tketers apply for new credit cards with teaser rates on behalf of consumers without consumers' knowledge or consent. 132. For exatnple, the consumet whose unsuccessful efforts to cancel the CCIRR service are discussed in Paragraph 116 of this Complaint received an email from Experian 20 Ctedit Reporting stating that two credit card applications were submitted using his personal 21 22 information. Soon thereafter, the consumer recdved a telephone call from a representative 23 of Chase Bank seeking to verify his application for a credit card, which the consumer had ·no 24 prior knowledge of and did not authorize. 25 26 133. The Educare Defendants' balance transfer tactic does not typically deliver the promised substantfal rate reduction. Consumers often cannot qt1alify for the new credit 27 28 cards, and in any event, the reduced rates are only temporary aod commonly followed by double-digit rates. 22 Case 3:19-cv-00196-KC Document 81 *SEALE:D* (Ex Parte) 134. 2 3 6 After securing the consumer's payment and failing to provide the promised substantial rate reduction, the Educare Defendants often stop returning the consumer's phone calls and otherwise cease communicating with the consumer. 4 5 Filed 12/03/19 Page 23 of 39 The Edi.1care Defenda11ts Routinely Refuse to I ssue Refunds 135. In their sales pitches, the Educate Defendants' telemarketers routinely tout a 100% money-back guarantee if the Educare Defendants fail to deliver the promised 7 8 substantially lower credit card interest rate, or if the consumer is otherwise dissatisfied with 9 the CCJRR service, 10 136. In numerous instances, the Educate Defendants do not honor the refund 11 promises. Instead, the Educate Defendants routinely make it extremely difficult, if not 12 impossible, for consumers to reach a representative via telephone to process refund requests. 13 137. Many consumers have discovered that the contact number the Educare 14 15 16 Defendants' telemarkete1· provided is no longer in service. 138. Consumers who have been able to reach a representative of the Educare 17 Defendants by telephone have 1·eported being strnng along with no refund or even partial 18 refund issued. 19 20 139. For example, one consiuner made over 20 telephone calls· to Educate in an effort to cancel the CCIRR service and get a refund, and spoke with various representatives 21 22 23 24 25 26 who were difficult to understand, evasive, condesceodiug, transferred her to a "manager" that never answered the phone, or misrepresented tl1at Educare had delivered the promised interest rate reduction even though it had not done so. 140. In addition, Educate has routinely failed to respond to consumer complaints and refund requests sent to it by the Bettet Business Bureau and state attorneys general. 27 28 23 Case 3:19-cv-00196-KC Document 81 "'SEALED* (Ex Parte) Filed 12/03/19 Page 24 of 39 Tbe Educare Defendan.ts' Abusive Telemarketing Practices 2 141. In numerous instances, the Educare Defendants, acting directly or thtough 3 one or moJ'e iutermediaries, have initiated telemarketing calls to consumers throughout the 4 United States that delivered a prerecorded message promoting the CCIRR service, without 5 first having obtained the consumct's signed express written agreement to receive such calls 6 by or on behalf of the Educate Defendants. 7 8 142. In marketing the CCIRR service, in numerous instances, the Educare 9 Defendants, acting directly or through one or more intermediaries, have called telephone 10 numbers listed in various area codes throughout the United States, including telephone 11 numbets listed on the National Do Not Call Regist.cy maintained by the FTC, without tl1e 12 Educate Defendants' fu-st paying the annual fee for access to the telephone numbers within 13 such area codes. 14 15 143. In numetous inswnces, the Educate Defendants have received fees they 16 caused ro be drawn from conswners' bank accounts during or immediately after the 17 telemarketing call offering the CCIRR service, but before the Educare Defendants had 18 undertaken any efforts to reduce the consumers' credit card foterest cates. This is illegal 19 under the TSR. 20 144. lo numerous instances, the Educare Defendants, acting directly or ~ttough 21 22 23 24 25 26 one or more intermediaries, have caused the creation of RCPOs as payment for the CCIRR service offered or sold through telemarketing. The Globex Defendants Assisted and Facilit-.tted Educa1·e•i:; Telemad