UNITED STATES OF AMERICA

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FEDERAL TRADE COMMISSION

WASHINGTON, DC 20580

Bureau of Consumer Protection

Division of Marketing Practices

Lois C. Greisman

Associate Director

March 27, 2020

VIA FEDEX AND

PDF EMAIL ATTACHMENT

Voxbone US LLC

San Francisco, CA

Voxbone US LLC

Attn: Antonio Gomes,

California Registered Agent

Simi Valley, CA

Warning Regarding Assisting and Facilitating

Illegal Robocalls Related to Coronavirus/COVID-19

Dear Mr. Gomes:

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.

Page 2

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

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

A copy of the TSR is attached as Appendix A.

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.

Page 3

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

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)

A copy of the FTC’s Amended Complaint is attached as Appendix B.

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.

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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.

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§ 310.2

16 CFR Ch. I (1–1–18 Edition)

(b) Attorney General means the chief

legal officer of a state.

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

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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

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§ 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]

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§ 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.

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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;

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

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

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§ 310.3

16 CFR Ch. I (1–1–18 Edition)

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(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);

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

§§ 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.

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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.

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

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§ 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

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;

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

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Federal Trade Commission

§ 310.4

charged using the account number pursuant to paragraph (a)(7)(i)(A) of this

section; and,

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

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Continued

§ 310.4

16 CFR Ch. I (1–1–18 Edition)

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(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

§ 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.

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

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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

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).

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.

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§ 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

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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.

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

§ 310.4(b)(1)(iii)(B) of this Rule.

(b) The following acts or practices

are exempt from this Rule:

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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

the

requirements

§§ 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

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§ 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

persons

pursuant

§§ 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.

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

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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]

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§ 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

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Appendix B

(Educare Amended Complaint)

Oi'f~f-\Vt:.U

t }t~½r:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Filed 12/03/19 Page 1 of 39

UNITED STATES DISTRICT COURT

WESTERN DISTRiCT OF. TEXAS

State of Ohio ex rel ,Attorney v enernl

Dave Yost,

Plaintiffs,

No. 3:1 9-CV-196

FIRST AMENDED COMPLAINT

FOR PERMANENT

INJUNCTION AND OTHER

EQUITABLE RELIEF

Eciti.ta"te Centre Services, Inc., a New

Jersey co1poration, also dba Credit Card

Services, Card Services, Ct edit Card

Financial Services, Cate Net, Tripletcl

Inc., Revit E duc Srvc, L .L. Vision, Cate

Value Services, and Card Value Services,

Tripletel, Inc., a Delawai:e corporation,

Prolink Vision, S.R.L.~a D ominican

Republic llini.ted liability company,

9896988 Canada Inc., a Canadian

company,

Globex Telecom, Inc., a Nevada

corporation,

9506276 Canada, Inc., dba G lobex

Telecom, Inc., a Canadian company,

Sam Madi, individually and as an owner,

officer, member, a nd/ or manager of

Educare Centre Services, Inc.,

Mohammad Souheil a/ k/ a

Mohammed Souheil and Mike

Souheil, individually and as an own er,

officer, member, and/ or manager of

E ducare Ceotte Services, Inc., 9896988

Canada, Inc., Globex Telecom, Inc.,

9506276 Canada, Inc., and Prolink

Vision, S.R.L.,

Wissam Abedel Jalil a / k / a Sam Jalil,

individually and as an owner, officer,

mem ber, and/ or manager of Tdpletel,

Inc., and Prolink Vision, S.R.L ,

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Charles Kharouf, individually and as an

owner, officer, member, and/ or manager

of Educare Centre Services, Inc., and

J>rolink Vision, S.R.L.,

Defendants.

Filed 12/03/19 Page 2 of 39

Plaintiffs, the Federal Trade Commission ("FTC") and the St.ate of Ohio, for their

First Amended Complaint ("FA Complaint'') allege:

The FTC brings this action under Sections 13(b) and 19 of the Federal Trade

Conunission Act ("FTC Act''), 15 U.S.C. §§ 53(b), 57b, and the Telemarketing and Consumer

Fraud and Abuse Prevention Act ("Telemarketing Act"), 15 U.S.C. §§ 6101-6108, to obtain

temporary, preliminary, and permanent injunctive relief, rescission or reformation of

contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, the

appointment of a receiver, an asset freeze, and other equitable relief for Defendants' acts or

practices in '1iolation of Section S(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of

the FTC's Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310.

The State of Ohio, by and through its Attorney General, Dave Yost, brings

th.is action pursuant to the Telemarketing Act, 15 U.S.C. § 6103, the Ohio Consumer Sales

Practices Act ("CSPA"), 0.R.C. 1345.07, and the Ohio Telephone Solicitation Sales Act

("TSSA''), O.R.C. 4719.01 et seq., in order to obtain temporary, preliminary, and permanent

injunctive relief, consumer damages, and other equitable relief from Defendants.

JURISDICT ION AND VENUE

This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331,

1337(a), 1345, and 1367.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Venue is proper in this disttict under 28 U.S.C. § 1391 (b)(2), (b)(3), and (c),

and 15 U.S.C. § 53(b).

SUMMARY OF THE CASE

Filed 12/03/19 Page 3 of 39

Since at least Feb1uary 2016, Sam Madi, Mohammad Souheil (a/k/a

Mohammed Souheil and Mike Souheil) ("Souheil"), Wissam Abedel Jaiil (a/k/a Sam Jaiil),

Charles Kharouf, Educare Centre·Services, Inc. ("Educare"), Tripletel, Inc. ("Tripletel"),

Prolink Vision, S.R.L. ("Prolink"), 9896988 Canada, Inc. ("988") (collectively the "Educare

Defendants"), Globex Telecom, Inc., aod 9506276 Canada, Inc. ("276") have engaged in or

assisted and facilitated n deceptive telemarketing scheme that markets a credit card interest

rate ·reduction service ("CCIRR service") to consumers throughout the United States.

The Educare Defendants cold-call consumers, using live calls and

prerecorded messages (commonly known as "robocalls"), promising that, in exchange for a

fee ranging from $798 to $1,192, they will obtain substantially lower interest rates on

consumeJ.-s' credit cards. To help lure consumers to purchase the CCIRR service, the

Educare Defendants promise a 100% "money-back guarantee".if tl1e Educare Defendants

fail to deliver the promised, substantially lower interest 1'ate or the consumers are otherwise

dissatisfied witl1 the service.

The Educate Defendants' promises are false or unsubstantiated. For the vast

majority of consumers who pay their fee, if not all, the Educare Defendants do not secure

the promised substantial rate reduction. In addition, the Educare Defendants routinely fail

to honor their money-back guarantee.

The Educate Defendants collect their service fee ftotn consumers through

remotely created checks or remotely created payment ordei:s (collectively "RCPOs") drawn

against consumers' checking accounts. The TSR expressly prohibits such use of RCPOs in

connection with telemarketing sales.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Filed 12/03/19 Page 4 of 39

Madera Merchant Services, LLC, an El Paso, Texas-based company, and

associated companies ("Madera"), which run an unlawful payment processing scheme,

provide the Educate Defendants with the means to collect payments from consumers

through RCPOs. With Madera's suppod, the Educate Defendants have taken at least $11.5

million from consumers' bank accounts via RCPOs. The Educare Defendants have taken

money from consume.ts located in the Western District of Texas. In addition, Madera, on

behalf of the Educare Defendants, deposited money into and withdrew money from banks

located in the Western District of Texas that the Educare Defendants obtained from

consumers.

10.

Concun:ently witl1 this action, the FTC and the St.ate of Ohio filed an action

against Madera and its principals. See r"TC ,1. Madera Merchant Services, LLC (WD. Tex. filed

Jul.18,2019).

11.

Globex Telecom, Inc. and 276 have assisted and facilitated the Educate

Defendants' scheme by providing communication services and facilities.

12.

The Educare Defendants' deceptive CCIRR service scheme violates the FTC

Act, the TSR, and Ohio's CSPA, and has injured numerous financially distressed consumers

across the United States.

PLAINTIFFS

13.

The FTC is an independent agency of the United States Government created

by statute. 15 U.S.C. §§ 41-58. The FfC enforces Section S(a) of the FfC Act, 15 U.S.C.

§·4S(a), which prohibits unfair ot deceptive acts 01· practices in or affecting commerce.

14.

The FTC is authorized to initiate federal district cout-t proceedings, by its

owi1 attorneys, to enjoin violations of the FTC Act and the TSR to secure such equitable

relief as may be appropriate in each case, including rescission or reformation of contracts,

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Filed 12/03/19 Page 5 of 39

restitution, the refund of monies paid, and the disgorgetnent of ill-gotten tnotlies. 15 U.S.C.

§§ 53(b), 57b.

15.

Plaintiff State of Ohio is one of the fifty sovereign states of the United

States, and by and through its Attorney General, Dave Yost, it brings this action under

O.R.C. 1345.01 et seq. and 0.R.C. 4719.01 ct seq. Pursuant to the authority found in the

Telemarketing Act at 15 U.S.C. § 6103(a), Plaintiff State of Ohio is also authorized to initiate

federal district court proceedings to enjoin telemarketing activities that violate the TSR, and

in each such case, to obtain damages, restitution, and other compensa~on on behalf of Ohio

residents. This Court has supplemental jurisdiction over Plaintiff State of Ohio's state law

claitns under 28 U.S.C. § 1367.

DEFENDANTS.

16.

The Educare Defendants sell the CCIRR service at issue; Prolink operates a

call center that telemarkets the CCIRR service to consumers on behalf of Educate; 988

maintained Educare's customer relationship management system ("CRM") and billing

reconciliation; aod Globex Telecom, Inc. and 276 provided interconnected Voice over

Internet Protocol ("VoIP") communication services and facilities to Educare.

17.

The four individual defendants are, or were during times relevant to the FA

Complaint, officers or tnaoagers of Educare, Prolink, 988, Globex Telecom, Inc., or 276,

and have directly participated in or cont.rolled 01· had the authority to control the unlawful

conduct challenged by the FA Complaint.

The Corporate Defendants

18.

Educate Centre Services, Inc., also dba Credit Card Services, Card

Services, Credit Card Fjnancial Services, Care Net, Trjplete~ Inc., Revit Educ Stvc, L.L.

Vision, Care Value Services, and Card Value Services is a New Jersey corporation with its

registered address at 244 Sd• Avenue, Suite 11417, New York, NY 10001.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

19.

Filed 12/03/19 Page 6 of 39

Educare has no website and does not appear to have a physical location in

the United States. Its president, director, and nominal owner is Satn Madi.

20.

Souheil is the de.facto principal behind Educare. He appears to operate the

company from Canada.

21.

Educar e sells the CCIRR service at issue in the FA Complaint.

22.

Educate contracts with and supervises telephone call cente.t'S, including

Prolink, to market the CCIRR service.

23.

Educare has been the subject of more than 100 Better Business Bureau

("BBB") consumer complaints and it and its dbas, including Credit Card Services and Care

Net, have received a "D +" or "F" rating f.rom the BBB serving the Metropolitan New York

area. Educare routinely fails to respond to consumer complaints to the BBB.

24.

At all times material to this FA Complaint, acting alone or in concert with

others, Educate has advertised, marketed, distributed, or sold the products and services at

issue in this FA Complaint to consumers throughout the United States. E ducate transacts or

has transacted business in this district and throughout the United States.

25.

Tripletel, Inc. is a Delaware corporation with its registered address at 910

Foulk Road, Suite 201, Wilmington, DE 19803. Wissam AbedelJalil is the president and

owner of Tripletel.

26.

Tcipletel is a dba of Educare, which received $2.3 tnillion in deposits &om

Madera.

27.

Prolink Vision, S.R.L. is a Dominican Republic limited liability company

wit;h its principal place of business at Av. 27 de Febrero Esq. Tiradentes, Plaza Merengue,

Segundo Piso, Local 214, Ens. Nace, Santo Domingo.

28.

Prolink is a telemarketer operating a telephone call center in the Dominican

Republic. It has been marketing the CCJRR setYice sold by Educate since at least February

I •

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

Filed 12/03/19 Page 7 of 39

2016. In its marketing of the CCIRR service sold by Educare, Prolink telemarketers have:

(A) initiated numerous unsolicited telephone calls, including robocalls, to U.S. consumers; (B)

made unlawful telemarketing sales pitches regarding the CCIR.R service sold by Educare; (C)

collected U.S. consume.ts' personal information, such as a Social Security number, email

address, credit card issuer and number, and bank account and routing numbers; and (D)

initiated three-way telephone calls with the U.S. consume1-s and the customer service

departments of the U.S. banks that issued the credit cards to the U.S. consumers.

29.

Prolink received more than $1.8 million in wire payments from the US.-

based Educare.

30.

Prolink has an English language website at ,vww.prnlinkvision.com and a

Facebook webpage at www.facebook.co1u/Prolinkvision.

·31.

Prolink's officers Mohammed Souheil and Charles Kharouf, and previous

officer Wissam Abedel Jalil, appear to operate Prolink out of Canada.

32.

Madi has identified himself as the General Manager of Prolink.

33.

At all times material to this FA Complaint, acting alone or in concert with

others, Prolink has advertised, marketed, distributed, or sold the products and services at

issue in this FA Complaint to consumers throughout the United States. Prolink transacts or

has transacted business in this district and throughout the United States.

34.

9896988 Canada Inc. is a Canadian corporation with a registered address of

7075 Place Robert-Joncas, Suite 225, St. Laurent, Quebec H4M 2Z2, Canada. Souheil is the

sole owner and president of 988.

35.

At Souheil's direction, 988 operated Educare's ClUvf, participated in the

debiting of consumers' accounts, and coordinated and reconciled the funds Educate had

withdrawn from consume1-s' checking accounts via unlawful RCPOs.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

36.

Filed 12/03/19 Page 8 of 39

In pei_:fonning operations related to 988, Souheil used the email address

mike@globextelecom.net.

37.

988 paid Madi almost $100,000 CAD during 2017 and 2018, ~nd Souheil

more than $172,000 CAD from 2017 through 2019. Since at least Februaty 2016, Educare

transferred at least $1 million to 988. 988 also received more than $100,000 from Globex

Telecom, Inc.

38.

988 transacts or has transacted business in this district and throughout the

United States.

39.

Globex Telecom, Inc. ("Globex") is a Nevada corporation. Its U.S. address

is 112 North Curry Street, Carson City, NV 89703. Globex also has an address in Canada at

7075 Robert-Joncas, Montreal, Quebec, H4M 2Z2 and 10 Four Seasons Place, 10th Floor,

Toronto, ON, M9B 6H7. It was previously organized under Delaware law and had a

Delaware address of 910 Foulk Road, Suite 201, Wilmington, Delaware 19803. Globex uses

the website address globextelecom.net.

40.

Globex is an interconnected VoIP service provider. As an interconnected

VoIP service provider, Globex provides information services pursuant to 47 U.S.C. § 153 of

the Communications Act of 1934, as amended.

41.

Souheil has been Globex's chief executive officer, president and secretary, as

well as a di.rector. Globex funds have been used for Souheil's personal benefit.

42.

On or about October 22, 2015, Globex entered into a Master Services

Agreement with Educate to provide Educare with "communication services and facilities."

Souheil executed the Agreement on behalf of Globex. Between February 2016 and June

2018, Educate transfer.red more than $1.6 million to Globex.

43.

Globex transacts 01· has transacted business in this district and throughout

the United States.

I•

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

44.

Filed 12/03/19 Page 9 of 39.

9506276 Canada, Inc., also dba Globex Telecommunications and Globex

Telecom, is a Canadian corporation. It lists its address as 225-7075 Place Robert-Joncas

Montreal, Quebec H4M2Z2 Canada. Souheil has been the president, treasurer, and secretary

of 276.

45.

276 is an interconnected VoIP sei-vice provider. As an interconnected VoIP

service provider, 276 provides info1mation services pursuant to 47 U.S.C. § 153 of the

Communications Act of 1934, as amended.

46.

Since at least February 2016, 276 has received m?te than $3 million from

Globex. 276 transacts or has transacted business in this district and throughout the United

States.

The Individual Defendants

47.

Sam Madi ("Madi") is a Canadian citizen who resides in Montreal, Quebec.

48.

Madi is the president, di.rector, and titular owner of closely-held Educate,

which he appears to operate from Canada. Madi executed an application for Educare's

,rirtual office at 244 51" Avenue, Suite 11417, New.York, NY 10001. Madi executed

agreements on Educare's behalf with Madel'a and Globex. He also has signatory authority

on multiple business checking accounts in the United States in the name of Educate and has

written thousands of dollars in checks against Educare's bank accounts that were cashed for

his own benefit.

49.

Between August 2, 2016 and May 28, 2019, Madi transferred more than $1.1

million in Educare funds th.rough Sama Investments and Trading, Inc., a Dearborn,

Miclugan money transmitter, to an Altaif, Inc. account in the name of Mohammad Souheil.

50.

Bet\veen May 17, 2016 and March 28, 2017, Madi transferred more than

$280,000 in E ducate funds through Sama Investments and Trading, Inc. to an Altaif, Inc.

account in the name of Wissam Abedel JaW.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

51.

Filed 12/03/19 Page 10 of 39

In or Around September 2017, Madi visited Prolink's office in the Dominican

Republic to, among other things, present reward certificates to several Prolink employees.

During his visit, Madi Also took photos with Prolink employees; one such photo is posted to

Prolink's Facebook page, identifying Madi as Prolink's "Genet-al Manager."

52.

On or about May 16, 2018, Madi sent an email to Mo!1ammad Souheil from a

Prolink Vision email address in whicl1 Madi identified himself as the General Manager o f

Prolink.

53.

At all times material to this Complaint, acting alone or in concert with others,

Madi has formulated, directed, controlled, had tl1e authority to control, or participated in the

acts and practices of Educue, including the acts Oi' practices set forth in this Complaint.

Madi transacts or has transacted business in this distt·ict and throughout the United States.

54.

Mohammad Souheil, a/k/a Mohammed Souheil and Mike Souheil

("Souheil") is a Canadian citizen who resides in Montreal, Quebec.

55.

Souheil is the 51 % owner and president of Prolink and the sole owner and

president of 988, which, together, have received wire transfers from Educare totaling more

than $4 million.

56.

Souheil was Educare's point of contact with Madera, Educare's E l Paso,

Texas-based payment processor. Souheil regularly communicated with Madera via email,

text message, and telephone concerning Educare's ptocessing settlements and consumers'

authorization for RCPOs. Souheil, using the email address 1nikesouheil@gmail.com, sent or

received more than 1200 emails to or from. Madera concerning Madera's processing of

Educare payments.

57.

Souheil knew that Educare's charges were being processed through RCPOs.

58.

Soheil knew that Educate was telemarketing CCIRR services.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

59.

Filed 12/03/19 Page 11 of 39

Souheil knew that Educate RCPOs had return rates of 10 to 20% and that

financial institutions had shut down Madera accounts used to process Educare payments.

60.

According to Madera's owner and president, Bruce C. Woods, during the

four years that Madera processed payments for Educate, Souheil "always appeared to [him]

to be in charge of Educare."

61.

In an email dated August 22, 2016, Souheil asked Woods if Educare can have

two logins under the Educate merchant account ("educare 2") because "I have a

[telemarketing] room i (sic) am opening and wanted to separate the login and the reports for

each how can we get that done?"

62.

In an email dated October 13, 2016, Souheil informed Madera that Educare's

''[v]olume will double in the next 60-75 days.. [W]e are aiming at [$]1M a month in

processing on educare 2 this is what we are working hard to accomplish and it will be done i

(sic) am sure, ... nothing will change th.is is why it takes time. I make sure the business model

stays the same and we grow in quality."

63.

In an email dated May 22, 2018, Souheil requested that Madera set up a new

account fol' Educare under the descriptot "L.L. Vision" "so we move to it and start ghring

this out to NEW clients."

64.

On numerous occasions, Souheil received Educate funds via an account in

his name at a Canadian money transmitter, Altaif, Inc. From January 18, 2016 through May

25, 2019, Souheil received more than $1.1 million from Educru:e via the Altaif, Inc. account.

65.

Between 2008 and 2009, Souheil and defendant Wissam Abedel Jalil opet:ated

a company known as FCS International ("FCS"), which exploited its membership in an

American Express affiliate program to market and sell CCIRR setvices to American Express

cardholders.

·1

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

66.

Fi led 12/03/19 Page 12 of 39

In 2009, American Express terminated its affiliate relationship with FCS after

recehring numerous complaints from cardholders about FCS's service. Consumers

complained that FCS failed to delivet on its promise to lower their credit card interest rates

in exchange for a fee, and submitted credit card applications on behalf of consumers

without autho1ization.

(,7.

At all times material to this Complaint, acting alone or in conceit with others,

Souheil has formulated, directed, controlled, bad the authority to control, or participated in

the acts and practices of Educare, Prolink, 988, Globex Telecom, Inc., and 276, including

the acts or practices set forth in this Complaint. Souheil, in connection with tlle matters

alleged herein, transacts or has transacted business in this distdct and throughout the United

States.

68.

Wissam Abedel Jalil a/k/ a Sam Jalil ("Jalil") is a Canadian citizen who

resides in Montteal, Quebec. Jalil is the president and owner of Tripletel.

69.

Jalil executed an application fc;>r Educarc's virrual office at 244 S"' Avenue,

Suite 11417, New York, NY 10001. He also has signatory authority on a busin~ss checking

account in the i1ame of Tripletel Inc., a dba of Educate, which received approximately $2.3

million in deposits from Madera.

70.

On numerous occasions co-defendant Madi used Sama Investments and

Trading, Inc., a Dearborn, Michigan money transmitter, to funnel Educare funds to Jalil via

an account in Souheil's name with a Canadian money transmitter, A.ltaif, Inc. Jalil received

more than $283,000 from Educate via the Altai£, Ioc., account in JaW's name.

71.

As described in Paragraphs 65-66 above, between 2008 and 2009,Jalil (along

with Souheil) operated a CCIRR scheme known as FCS, which marketed and sold CCIRR

services to American Express cardholders llnd genernted numerous complaints about

deceptive acts and practices.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

72.

Filed 12/03/19 Page 13 of 39

Jalil was an owner and officer of Prolink from at least October 19, 2015 until

at leastj:muary 10, 2018.

73.

At all times material to this Complaint, acting alone or in concert with others,

he has formulated, directed, controlled, had the authority to control, or participated in the

ads and practices of Prolink, including the acts or practices set forth in this Complaint. Jalil,

in connection with the mattets alleged herein, transacts or has transacted business in this

district and throughout the United States.

74.

Charles Kharouf is a Canadian citizen who resides in Montreal, Quebec.

75.

Kharouf became an owner and officer of Prolink on or around January 10,

2018, more than two years after Prolin.k began telemarketing Educare's CCIRR sei:vice.

76.

Kharouf is also an owner and officer of 9322-4756 Quebec Inc. also dba

Devcostrat, a call center lead generator. Before Kharouf acquired ownership in Prolinlc,

Devcostrat received mo.re than $41,000 in wire transfers from Educate.

77.

Kharouf has received more than $28,000 in wire transfers from Educate.

78.

At all times material to th.is Con1plaint, acting alone or in concert with others,

Kharouf has formulated, directed, controlled, had the authority to control, or participated in

the acts and practices of Prolink, including the acts or practices set forth in this Complaint.

Kl1arouf, in connection with the matters alleged herein, transacts or has transacted business

in this district and tbroughout the United States.

COMMON ENTERPRISE

79.

Defendants Educare, Prolink, 988, and Tcipletel have operated as a common

enterprise while engaging in the unlawful acts and pr:ictice alleged in this Complaint.

Educare, Proli.nk, and Tripletel sold the CCIRR services at issue in this Complaint. 988

operated the CRM and coordinated h:iving funds withdrawn fron1 consumets' accounts via

unlawful RCPOs. Souheil is the majority owner of Prolink, the sole owner of 988, and the

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

de facto principal of Educare. Both Madi and Jalil have executed applications for Educare's

virtual office at its New York address. Tripletel as a dba of Educate received $2.3 million in

deposits from Madera.

Filed 12/03/19 Page 14 of 39

80.

Educate, Prolink, 988, and Tripletel have conducted business p1-actices

described herein through interrelated companies, which have a common business purpose,

business functions, and employees; and that marketed and sold common services, shared

revenues, and corningled funds.

81.

Because Educa1·e, Prolinlc; 988, and Tripletel operated as a common

enterprise, each of the entities is jointly and severally liable for the acts and practices alleged

in this FA Complaint. At all times material to this Complaint, Souheil, Kharouf, Madi and

Jalil formulated, directed, controlled, had the authority to control, or participated in the acts

and practices of Educate, Prolink, 988, and Tripletel which constitute the Educate

Defendants common enterprise.

82.

Defendants Globex Telecom, Inc. and 276 (collectively, "the Globex

Defendants") also have operated as a common enterprise while engaging in the unlawful acts

and practice alleged in trus FA Complaint. They have conducted business practices

desctibed herein through intei:related companies, which have a common business purpose,

business functions, and officers; have used the same name, shared revenues, and com.ingled

funds.

83.

Because the Globex Defendants operated as a common enterprise, each is

jointly and severally liable for the acts and practices alleged against them in this FA

Complaint At all times material to this Complaint, Souheil formulated, directed, controlled,

had the authority to control, or participated in the acts and practices of the Globex

Defendants.

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Filed 12/03/19 Page 15 of 39

COMMERCE

84.

At all times material to this FA Complaint, Defendants have maintained a

substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4

of the FTC Act, 15 U.S.C. § 44.

REMOTELY CREATED PAYMENT ORDERS

AND REMOTELY CREATED CHECKS

85.

An RCPO is a check or order of payment that the payee (typically a

merchant or its agent) creates electronically, with software, using the payor's (typically a

consumer) bank account information. .

86.

Unlike with a conventional check, the payor does not sign the RCPO.

Instead, the RCPO usually bears a statement indicating that the account holder (the account

from which the inoney is to be drawn) authorized the check, such as "autho1·ized by account

holder" or "signature not required"

87.

RCPOs can be printed and manually deposited into the check clearing system

like a conventional check. An electronic version of an RCPO that looks like a paper check,

but never exists in paper form, can also be deposited into the check clearing system using

remote deposit capture-a system that allows a depositor to scan checks remotely and

transmit the check images to a bank for deposit.

88.

RCPOs are generally subject to less oversight and monitoring than more

prevnlent med1ods of consumer payments, such as Automated Clearinghouse ("ACH") and

debit and credit card transactions.

89.

Payments cleared through the ACH network are subject to oversight by

NACH.A - The Electronic Payments Association (''NACHA"), a self-regulatory trade

association that enforces a system of rules, monitoring, and penalties for noncompliance.

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Filed 12/03/19 Page 16 of 39

NACHA monito1·s the levels at which ACH debits are returned (or rejected) by consumers

or consumers' banks, among otl1et t~sons, because high rates of returned transactions can

be indicative of unlawful practices by merchants.

90.

The credit and debit card networks ("catd networks"), such as MasterCard

and Visa, also have rules regarding ooboarding and monitoring of merchants, and penalties

for noncompliance. These include heightened monitoring requirements for merchants

designated as high risk, such as telemarketers.

91.

The card networks require network participants - including merchants,

payment processors and merchant banks - to monitor transactions for unusual activity

indicative of fraud or deception. One prominent indicator is a high chargeback rate.

Chargebacks occur when customers contact their credit card issuing bank to dispute a charge

appea1i.ng on their credit card account statement. Merchants with high chargeback rates may

be placed in a monitoring program and their sponsoring banks may be subject to fees and

fines.

92.

Unlike ACH aud debit and credit card transactions, RCPOs are not subject to

centralized and systemic monitoring.

93.

Since June 13, 2016, the TSR has prohibited sellers and telemarketers from

using RCPOs in: telemarketing sales. The FTC added this prohibition to the TSR because,

after an extensive notice and comment process, it found little record of legitimate

telemarketing business using RCPOs.

DEFENDANTS' UNLAWFUL BUSINESS PRACTICES

94.

Since at least February 2016, the Educate Defendants have engaged in a

telemarketing scheme that markets a CCIRR service to consumers using false or

unsubstantiated claims. The Educare Defendants promise to reduce significantly the interest

rate on consumers' credit cards, and further promise a 100% money back guarantee if the

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

promised rate reduction does not materialize or th e consumer is dissatisfied with the CCIRR

service. As desC1'ibed below, these promises ate false or unsubstantiated.

95.

Filed 12/03/19 Page 17 of 39

The Educare Defendants use RCPOs to collect payments from consumers in

violation of the TSR, which expressly prohibits using RCPOs in connection with

telemarketing sales.

, Defendants' D eceptive Telemarketing Campaign

96.

Since at least Febtuary 2016, the Educare Defendants have engaged in a plan,

program, or campaign to advertise, market, promote, offer for sale, or sell a CCIRR service

tluough interstate telephone calls to consumers throughout the United States.

97.

In numerous instances, the Educare Defendants have initiated, ot directed

others, including telemarketers with ~rolinlc, to initiate unsolicited telemarketing calls that

offer consumers an opportunity to lower their credit card interest rates.

98.

In numerous instances, the Educare Defendants' telemarketing calls deliver

p~erecorded voice messages. These messages offer consumers the opportunity to secure

credit card interest rates that are substantially lower from those consumers were paying, and

instruct consumers to press a button on the telephone keypad to hear more about the

service.

99.

Consumers who press a button on their telephone lceypad to hear more

about the service are connected to a live telemarketer who continues the deceptive sales

pitch, as described below. Man}', if not all, of these telemarketers are associated with

Prolink's call center.

100.

In numerous instances, the Educate Defendants' telemarketers fail to

disclose to consumers, truthfully, promptly, and in a clear and conspicuous manner, the

identity of the seller of the CCIRR service. Instead, the Educate Defendants' telemarketers

routinely identify themselves as representatives of "Credit Card Services," "Credit Card

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Filed 12/03/19 Page 18 of 39

Financial Services," or similar Educate dbas that sound like the name of a bank or credit

card compan}',

101.

In many instances, the Educare Defendants' telemarketers know the last four

digits of at least one of the consumer's credit cards. That fact often leads consumers to

assume that they are speaking with a representative ot agent of their bank oi: credit card

company.

102.

The Educare Defendants' telemarketers guarantee to consumers that they

can substantially reduce consumers' credit card interest rates.

103.

In numerous instances, the Educare Defendants' telemarketers have told

consumers holding credit cards with high double-digit interest rates that the CCIRR service

would .reduce the interest rates on the consumers' cards to 0%-10%, 01· transfer the balance

to credit cards with such substantiali}' lower interest rates.

104.

For example, one telemarketer placed a consumer oo. hold, and returned a

few minutes later stating that the Educate Defendants had permanent!}' lowered tl1e interest

rate 011 one of consumer's credit cards to 3%, and would similarly lower the interest rates on

the consumer's otl1er credit cards if tl1e consumer signed an online agreement.

105.

Another of the Educare Defendants telemarketers told a consumer paying

about 29% on a combined credit balance of oeady $8,000 that the Educate Defendants

worked with a bank that would give the consumer one new credit card with a 6.9% interest

rate and a credit limit exceeding the consumer's combined balance.

106.

In nµmerous instances, the Educate Defendants' telemarketers tell

consumers that using the CCIRR service will not ha.rm the consumers' credit histOr}', Some

of the Educi'lre Defendants' telemarketers have represented that the CCIRR service will

improve the consumers' credit history because the consumer will be able to pay off his or

her credit card debt faster.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

107.

Filed 12/03/19 Page 19 of 39

The Educare Defendants' telemarketers typically instruct consumers to

provide their personal information, such as a social securit}' number, email address, credit

card issuer and number, and bank account and routing numbers.

108.

Either before or after the consumers provide this information, the Educare

Defendants' telemarketers tell consumers that they have to pay an up-front fee for the

CCIRR service, which typically ranges from $798 to $1,192.

109.

In numerous instances, the Educate Defendants' telemarketers have told

consumers that the significant savings the CCIRR service provides to the consumer would

offset the fee payment.

110.

The Educate Defendants' telemarketers typically ask if the consumer agrees

to the fee and the CCIRR service, and tell consumers that their responses are being

recorded.

111.

The Educate Defendants' telemarketers often tell consumers that the)' will

recehre a w1-itten agreement describing the CCIRR service in the mail. In numerous, if not

all,.instances, the consumers do not receive the promised agreement in the mail.

112.

In numerous instances, the Educare Defendants' telemarketers tell

consumers that they will receive a text or email message asking them to confirm that they

want to purchase the CCIRR service. For example, one consumer i-eceived the following

text message: "Dear [consumer's name), Please reply '{ES to this msg to authorize the fee

of $798 for services rendered by educate split into 5 payments. Thank you!"

· 113.

As in the above instance, the Educare Defendants' telemarketers often do

not disclose the identity of Educare or its dbas up front. Instead, Educare or its dbas appear

for the fu:st time in the confirmation-request email 01· text.

114.

Consumers ,~ho respond to the confirmation-request text or email message

typic_ally i-eceive a subsequent text or email message confirming the fee authorization. For

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Filed 12/03/19 Page 20 of 39

example, one consumer received the following text message: "[Consumer's name]: You have

approved 5 payment of $159.60 for a total of $798 to be debited from your Account ~X.'X

Cst Srv: 866-456-1676"

115.

In numerous instances, the Educare Defendants' telemarketers and customer

service agents have refused to honor requests to cancel set-vice from consumers who have

become concerned with or suspicious of the CCIRR set-vice, including requests made on the

same day the service was purchased.

116.

For example, in 2018, a telemarketer who identified himself as William Silva

and a "financial advisor" for "Card Services," refused a consumer's cancellation request after

the consumer agreed to pay for the CCIRR service but then attempted to back out of the

deal up011 realizing during the telephone call that Mr. Silva did not represent his credit card

company.

117.

Another Educare Defendants telemarketer told a consumer who requested to

cancel the CCIRR service on the same day of the purchase that it was too late because the

consumer had already agreed to the charges.

118.

The Educal'e Defendants have also threatened consumers who sought to

cancel the CCJRR service with sending the consumers' accounts to collections.

119.

For example, a telemarketer who identified himself as Jacob Scott with Care

Value Sel'vices told one consume!' who requested cancellation of the CCIRR service that the

consumer could not cancel, and that the Educal'e Defendants were still going to debit the

fees from consumer>s checking account, and if the consumer did not pay, the Educate

Defendants would tack on additional fees and sue him in court.

120.

In numerous instances, the Educate Defendants have drawn, or caused to be

drawn, payments from accounts of consumers who requested to cancel the CCIRR service

and instructed the Educare Defendants not to draw funds from their accounts.

C~se 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

121.

Filed 12/03/19 Page 21 of 39

For example, in mid-2018, Educate debited nearly $800 over a period of 5

months from the checking account of a consumer who told the Educate Defendants'

telemarketers aod customer service agents not to charge his account and made repeated

requests to cancel the CCIRR service.

Unlawful RCPOs Drawn Against Consumets' Checking Accounts

122.

To collect the fee for the CCIRR service, the Educate Defendants, with the

help of payment processor Madera, use personal infortnation they solicit from consumers,

including bank account and routing number, to cause the creation of RCPOs drawn against

consumers' bank accounts.

123.

Many such RCPOs are returned by the consumers' banks for reasons such as

"stop payment," "forget}':' "closed actount," and "unable to locate."

124.

During the relevant period, several bank accounts opened by Madera under

various dbas of Educate had return rates of 20% or more.

125.

Since January 2016, Madera has transferred to Educare at least $11.5 million

in consumer funds collected through RCPOs. The Educare Defendants and Madera have

collected more than $7 million of that amount from consumers after June 13, 2016, the date

on which the TSR started banning the use of RCPOs in connection with any telemarketing

sales.

Defendants Fail to Deliver the Promised Substantial Rate-Reduction

126.

In some instances, after the consumers authorized the fee payment, the

Educate Defendants' telemarketets initiate three-way telephone calls with the consumers and

the customer service departments of the banks that issued the credit cards to the consumer.

During these three-way calls, the Educate Defendants' telemarketers request, 01' prompt the

consumers to request, that the bank reduce the interest rate on the consumets' credit cards.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

127.

Filed 12/03/19 Page 22 of 39

In some instances, the Educate Defendants' telemarketers have asked

consumers to misrepresent or fabricate persom1l information to bank representati,res.

Io most instances, the tluee-way calls that the Educate Defendants'

128.

telemarketers initiate with the consumers and the credit card issuing banks do not lead to the

promised substantial interest rate reduction, if any at all.

In numerous instances, the Educate Defendants use the information they

129.

obtain from consumers to apply on behalf of consumers, or advise the consumer to apply,

for new credit cards with low introductory 1-ates (commonly known as "teaser rates") and

transfer their existing credit card balances to those new cards.

130.

For example, an Educare Defendants' telemarketer promised a consumer a

new credit card with a 0% APR for 1 year and a 6.99% fixed rate thereafter, but the

consumer actually received a new credit card with a 0% APR for 9 months and over 20%

APR thereaftc.r.

131.

In some instances, Educare Defendants' telemarketers apply fol' new cl'edit

cards with teaser rates on behalf of consume1-s witl1out consumers' knowledge or consent.

132.

For example, the consumer whose unsuccessful efforts to cancel the CCIRR

service are discussed in Paragraph 116 of this Complaint received an emnil from Experian

Credit Reporting stating that two credit card applications were submitted using hjs personal

information. Soon thereafter, the consumer L'eceived a telephone call from a representative

of Chase Bank seeking to verify his application for a credit card, which the consumer had ·110

prior knowledge of and did not authorize.

133.

The Educare Defendants' balance transfer tactic does not typically deliver the

promised substantial rate reduction. Consumers often cannot qualify for the new credit

cards, and in any event, the reduced rates are only temporary and commonly followed by

double-digit rates.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

134.

After securing the consumer's payment and failing to prmTide the promised

substantial rate reduction, the Educare Defendants often stop returning the consumer's

phone calls and othetwise cease communicating with the consumer,

Filed 12/03/19 Page 23 of 39

The Edi.1care Defendants Routinely Refuse to Issue Refunds

135.

In their sales pitches, the Educate Defendants' telemarketers routinely tout a

100% money-back guarantee if the E ducate Defendants fail to deliver the promised

substantially lower credit card interest rate, or if tl1e consumer is othenvise dissatisfied witl1

the CCIRR service.

136.

In numerous instances, the Educare Defendants do not honor the refund

promises. Instead, the Educare Defendants routinely make it extremely difficult, if not

impossible, for consumers to reach a representative via telephone to process refund requests.

137.

Many consumers have discovered that the contact number tl1e Educare

Defendants' telemarketer provided is no longer in service.

138.

Consumers who have been able to reach a representative of the Educare

Defendants by telephone have reported being strung along with no refund or even partial

refund issued.

139.

For example, one consumer made over 20 telephone calls· to Educare in an

effort to cancel the CCIRR service and get a refund, and spoke with various representatives

who were difficult to understand, evasive, condescending, transferred her to a "manager"

that never answered tl1e phone, or misrepresented that Educare had delivered the promised

interest mte 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 Better Business Bureau and state attorneys general.

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Filed 12/03/19 P~ge 24 of 39

The Ed11ca1·e Defendants' Abusive T elemarketing P ractices

141.

In numerous instances, the Educate Defendants, acting directly or through

one or m oJ:e intermediaries, have initiated telemarketing calls to consumers throughout the

United States that delivered a prerecorded message promoting the CCIRR service, without

first having obtained the consumers signed express written agreement to receive such calls

by ot on behalf o f the E ducate Defendants.

142.

In marketing the CCIR.R setvice, in numerou s instances, the Educate

Defendants, acting directly or through one or more intermediaries, have called telephone

numbers listed in various area codes throughout the United States, including telephone

numbers listed on the National Do Not Call Registry maintained by the FTC, with out the

Educare D efendants' fu-st paying the annual fee for access to the telephone numbers within

such area codes.

143.

In numerous instances, the Educate Defendants have received fees they

caused to be drawn from conswn ets' bank accounts during or immediately aftet the

telemarketing call offering the CCIR.R service, but before th e Educate Defendants had

undertaken any efforts to reduce the consumers' credit card interest rates. This is illegal

under the TSR.

144.

Io numerous instances, the Educate Defendants, acting directly or ~ttough

one or more intermediaries, have caused the creation of RCPOs as payment fot the CCIRR

service offered or sold through telemarketing.

T he Globcx Defendan ts Assisted and Facilit~ted Educa1·e•s Tele m arketing Schem e

145.

The Globex Defendan~ provided substantial assistance to the Educare

Defendants by providing them with the means to call consumers throughout the United

States via interconnected VoIP communication services and facilities.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

146.

Filed 12/03/19 Page 25 of 39

Since circa January 2016, the Globex Defendants and their owner and dcja'1o

principal, Souheil, knew or consciously avoided knowing that Educare was violating the TSR

in its telemarketing of CCIRR set-vices: Souheil and the Globex Defendants knew or

consciously avoiding knowing that, among other things, Educate:

Misrepresented that consumet'S who purchase the CCIRR service (1)

would have their credit card interest rates reduced substantially; or

(2) would be entitled to a full refund if the Educare Defendants

could not obtain a lower interest rate or if the consumer was not

completely satisfied with the CCIRR service;

Created or caused to be created, directly or inditectly, a remotely

created payment order as payment for goods or se1vices offered or

sold through telemarketing, duci.ug the time periods set forth in the

FA Complaint;

Charged or received a fee in advance of providing debt relief service;

Initiated outbound telephone calls that delivered unlawful;

prerecorded messages; or

Failed to disclose the identity of the seller of the CCIRR service

ttuthfully, promptly, and in a clear and conspicuous manner to the

person receiving the call.

147.

Between January 2016 and November 2018, Educare caused more than $9.5

million in unreimbursed consumer harm to consumers in the United States. The Globex

Defendants are jointly and severally liable with the Educate Defendants for that harm, which

was caused by their provisioµ of communication services and facilities to the Educare.

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Filed 12/03/19 Page 26 of 39

Ohio>s Telephone Solicitor's Registration Requirement

148.

Ohio's Telephone Solicitation Sales Act, O.R.C. 4719.01 el seq., genei-ally

requires telephone solicitors that make telephone solicitations to individuals in Ohio to

149.

Defendants Educate and Prolink have been solicitors that make telephone

solicitations to individuals in Ohio. Nevertheless, they have neither registered as telephone

solicitots with, nor provided a copy of a surety bond to, the Ohio Attorney General.

150.

Based on the facts and violations of law alleged in this Complaint, Plaintiffs

have reason to believe that the Educare Defendants and the Globex Defendants are violating

or are about to violate laws enforced by the Commission and the Ohio Attorney General.

VIOLATIONS OF THE FTC ACT

151.

Section S(a) of the FfC Act, 15 U.S.C. § 45(a), prohibits "unfair or deceptive

acts or practices in or affecting commerce."

152.

:Misrepresentations or deceptive omissions of material fact constitute

deceptive acts or practices prohibited by Section 5(a) of the FTC Act. 15 U.S.C. § 45(a).

COUNT ONE (EDUCARE DEFENDANTS)

False or Unsubstantiated Credit Card Interest Rate Reduction and Refund Claims

153.

In numerous iost;nces, in connection with the advertising, marketing,

promotion, offering for sale, or sale of a debt relief service, the Educate Defendants have

tepresented, directly or indirectly, expressly or by implication, that:

Consumers who purchase the CCIRR service would have their credit

card interest rates reduced substantially; and/or

Consumers who purchase the CCIRR service would be entitled to a

full refund if Defendants could not obtain a lower interest rate or if

the consumer was not completdy satisfied with the CCIIUl service.

Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte)

154.

Filed 12/03/19 Page 27 of 39

In ttuth and in fact, in numerous instances in which the Educare Defendants

have made the rep.t:esentations set forth in Paragraph 153 of this Complaint:

Consumers who purchase the CCIRR service do not have their credit

card interest rates reduced substantially; and/ or

Consumers who purchase the CCIRR service and do not obtain a

lower interest rate 01" are not completely satisfied with the CCIRR

service do not provided a full refund.

15~.

Therefore, the Educare Defendants' representations as set forth in Paragraph

153 of this Complaint are false or misleading and constitute a deceptive act or practice .irt

violation of Section S(a) of the FTC Act, 15 U.S.C. § 45(a).

THE TELEMARKETJNG SALES RULE

l 56.

In 1994, Congress directed the FTC to prescribe rules prohibiting abusive

and deceptive telemarketing acts or practices pursuant to the Telem.'lrketing Act, 15 U.S.C. §§

6101-6108. The FTC adopted the original TSR 1n 1995, extensively amended it in 2003, and

amended certain sections thereafter.

. 19

157.

Defendants are all "sellers" or "telem::irketers" engaged in ''telemarketing" as

defined by the TSR, 16 C.ER. § 310.2(dd), (ff), and (gg). For purposes of the TSR, a "seller"

is any person who, in connection with a telemarketing transaction, provides, offers to

provide, or arranges for others to provide goods or services to a customer in exchange for

consideration. 16 C.F.R. § 310.2(dd). A "telemadceter" means any person who, ii1

connection with telemarketing, initiates or receives telephone calls to or from ·a customer or

donor. 16 C.F.R. § 310.2(ff).

158.

"Telemarketing' means a plan, program, or campaign which is conducted to

induce the purchase of goods or services or a charitable contribution, by use of one or mo1·e

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Filed 12/03/19 Page 28 of 39

telephones and which it1volves more than one int'-:rstate telephone call. 16 C.F.R. §

310.2(gg).

159.

The Educate Defendants are sellers or telemarketers of "debt relief services"

as defined by the TSR, 16 C.F.R. § 310.2(0). Under the TSR, a "debt relief service" is 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, itlclucling, but not limited to, a reduction in the balance, interest

rate, or fees owed by a person to an unsecured creditor or debt collector. 16 C.F.R. §

310.2(0).

160.

The TSR p1'0hibits sellers and telemarketers from misrepresenting, directly or

by implication, 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

usitlg the service. 16 C.F.R. § 310.3(a)(2)(x).

161.

The TSR prohibits sellers and telemarketers from re<1uesting or receiving

payment of an}' fee or consideration for any debt relief service until and unless:

A. The seller or telemarketer has renegotiated, settled, reduced, or othenvise

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 othex valid contractual agreement

between tl1e customer and the creditor or debt collector; and

C. To the extent tl1at debts enrolled in a service are renegotiated; settled,

reduced, or othe1wise altered individually, the fee or consideration either:

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Bears the same proportional relationship to the total fee for

renegotiating, settling, reducing, or alterir1g 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

u. 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 se1-vice and the amount actually

paid to satisfy the debt. 16 C.F.R. § 310.4(a)(S)(i).

162.

The TSR prohibits sellers and telemarketers from 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. 16 C.F.R. § 310.4(a)(9). A remotely created

payment order includes a remotely created check.16 C.f.R. § 310.2(cc).

163.

The 2003 amendments to the TSR established the National Do Not Call

Registry, maintained by the FfC, of consumers who do not wish to receive certain types of

telemarketing calls. Consumers can register their telephone numbers on the Regisu:y without

charge either through a toll-free telephone call or over the Internet at www.donotcall.gov.

164.

The FfC allows sellers, telemarketers, and other permitted organizations to

access the Registry over the Internet at www.telemarketing.donotcall.gov, to pay any required

fce(s), and to download the numbers not to call.

165.

The TSR prohibits selle1-s and telemarketers from calling any telephone

number within a given area code unless the seller on whose behalf the call is made has paid

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the annual fee for access to the telephone numbers within that area code included in the

Registry. 16 C.F.R. § 310.8.

166.

The TSR prohibits sellers and telemarketers from .initiating an outbound

telephone call to telephone numbe.ts on the Registry. 16 C.F.R. § 310.4(b)(1)(ili)(B).

167.

'TI1e TSR prohibits initiating a telephone call that delivers a prerecorded

message to induce the purchase of any good or service unless the seller has obtained from

the recipient of the call an express agreement, in writing, that evidences the willingness of

the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of

a specific seller. 16 C.F.R. § 310.4(b)(1)(v)(A).

168.

The TSR requires telemarketers in an outbound telephone call or internal or

external upsell to induce the purchase of goods or services to disclose the identity of the

seller truthfully, promptly, and in a clear and conspicuous manner to the person receiving the

call. 16 C.RR. § 310.4(d)(1).

169.

It is a deceptive teletnarketing 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 Sections 310.3(a), (c) or (d) or Section 310.4 of this Rule. 16

C.F.R. § 310.3(b).

170.

Pursuant to Section 3(c) of the Telemarketing Act, 15 U.S.C. § 6102(c), and

Section 18(d)(3) of the f<TC Act, 15 U.S.C. § 57a(d)(3), a violation of the TSR constitutes an

unfair or deceptive act or practice in or affecting commerce, in violation of Section S(a) of

the FTC Act, 15 U.S.C. § 45(a).

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VIOLATIONS OF THE TELEMARKETING SALES RULE

(By the FTC- and the State of Ohio)

COUNT TWO (EDU CARE DEFENDANTS)

Misrepresentations of Material Aspects of a Debt Relief Service

171.

In numerous instances since February 2016, in connection with the

telematketing of a debt relief service, the Educare Defendants have misrepresented, dfrectly

or by implication, material aspects of the service, including, but not limited to, that:

Consumers who purchase the CCIRR service would have their credit

card interest rates reduced substantially; and/ or

Consume.rs who purchase the CCIRR service would be entitled to a

full refund if the Educare Defendants could not obtain a lower

intetest rate or if the consumer was not completely satisfied with the

CCIRR service.

172. · The Educare Defendants' acts and practices, as set forth in Paragraph 171

above, are deceptive telemarketing acts or practices that violate the TSR, 16 C.F.R. §

310.3(a)(2)(x).

COUNT THREE (EDUCARE DEFENDANTS)

Charging or Receiving a Fee in Advance of Providing

Debt Relief Service

173.

In numerous instances since February 2016 in connection with the

telemarketing of a debt relief service, the Educare Defendants have requested or received

payment of a fee or consideration for a debt relief service before: (a) they have

renegotiated, settled, reduced, or otherwise nltered the terms of at least one debt pursuant to

a settlement agreement, debt management plan, or other such valid contractual agreement

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executed by the consumer; and (b) the consumer has made at least one payment pursuant to

that agreen1ent.

174.

The Educate Defendants' acts or practices, as set forth in Pai-agraph 173

above, are abusive telemarketing acts or practices that violate the TSR, 16 C.F.R. §

310.4(a)(S)(i).

COUNT FOUR (EDU CARE DEFENDANTS)

Use of Remotely Created Payment Orders

in Connection with Telemarketing

. 175.

In numerous instances since June 13, 2016, the Educare Defendants have

created or caused to be created, directly or indirectly, a remotely created payment order as

payment for goods or services offered or sold through telemarketing.

176.

The Educate Defendants acts or practices, as set forth in Paragraph 17 5

above, are abusive telemarketing acts or practices that violate the TSR, 16 C.F.R. §

310.4(a)(9).

COUNT FIVE (EDUCARE DEFENDANTS)

Initiating Unlawful Prerecorded Messages

177.

In numerous inst.ances since February 2016, in connection with

telemarketing, the Educare Defendants have engaged in, or caused a telemarketer to engage

in, initiating outbound telephone calls that deliver prerecorded messages in violation of the

TSR, 16 C.F.R. § 310.4(b)(1)(v)(A).

COUNT SIX (EDUCARE DEFENDANTS)

Failing to Pay National Registry Fees

178.

In numerous instances since February 2016, in connection with

telemarketing, the Educare Defendants have initiated, or caused others to initiate, an

outbound telephone call to a telephone number within a given area code when the Educate

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Defendants had not, either directly or through another person, paid the required annual fee

for access to the telephone numbers within that area code that are included in the National

Do Not Call Regis tty, in violation of the TSR, 16 C.F.R. § 310.8.

COUNT SEVEN (EDUCARE DEFENDANTS)

Failure to Make Oral Disclosures Required by the TSR

179.

In numerous instances since February 2016, in connection with

telemarketing, tl1e Educare Defendants have initiated, or caused others to initiate, an

outbound telephone call to induce the purchase of a CCIRR service that failed to disclose

the identity of the seller of the CCIRR service truthfully, promptly, and in a clear and

conspicuous manner to the person receiving the call, in violation of the TSR, 16 C.F.R.

§ 310.4(d)(1).

COUNT EIGHT (GLOBEX DEFENDANTS)

Assisting and Facilitating

180.

As described in paragrap\1s 16-17, 42, 67, 82-83, 145-47, above, the Globex

Defendants have, in numerous instances, provided substantial assistance and support,

though the provision of communication services and facilities, to one or more sellers or

telemarketers, whom the Globex Defendants knew, or consciously avoided knowing, were

violating§§ 310.3(a)(2)(x), 310.4(a)(S)(i), 310.4(a)(9), 310.4(b)(1)(v)(A), and 310.4(d)(1) of the

TSR by:

A. Misrepresented that consumers who purchase the CCilUl service

(1) would have their credit card interest rates reduced substantiall}•; or

(2) would be entitled to a full refund if the Educare Defendants could

not obtain a lower interest rate or if the consumer was not completely

satisfied with the CCilUt service;

B. Charging or receiving a fee in advance of providing debt relief service;

C. Using RCPOs as payment for goods or services offered or sold through

telemarketing;

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D. Initiating outbound telephone calls that deliver unlawful prerecorded

messages; or

E. Faili.ng to disclose the identity of the seller of the CCIRR service

truthfully, promptly, and in a clear and conspicuous manner to tl1e person

receiving the call.

181.

The Globex Defendants' acts or practices, as described in Paragraph 181

above, violate the TSR, 16 C.F.R.; § 310.3(b).

VIOLATIONS OF THE OHIO CONSUMER SALES PRACTICES ACT

(By the State of Ohio)

182.

Ohio's CSPA, O.R.C. 1345.01 et seq., generally prohibits "suppliers" from

engaging in unfair or deceptive acts or practices in connect.ion with "consumer transactions."

183.

Defendants are "suppliers" as defined in 0.R.C. 1345.01 (C) because they, at

all times relevant hereto, were engaged in the business of effecting or soliciting consumer

transactions, whether or not they dealt directly with consumers.

COUNT NINE (EDU CARE DEFENDANTS)

Failing to Deliver Services or Provide Refunds

184.

As described in paragraphs 16-149 above, the Educare Defendants

committed unfair or deceptive acts or practices in violation of the Failure to Deliver Rule,

O.A.C. 109:4-3-09(A) and the CSPA, O.R.C. 1345.02(A), by accepting money from

consumers for goods or senrices, and specifically offering services to reduce the consumers'

credit card rates, and then permitting eight weeks to elapse without making shipment or

delivery of the goods or services ordered, making a full refund, advising the consumer of the

du1:ation of an extended delay and offering to send a refund with.in two weeks if so

requested, or furnishing similar goods or se1-vices of equal or greater value as a good faith

substitute.

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COUNT TEN (EDUCARE DEFENDANTS)

Misrepresenting Characteristics of the Transaction

185.

As described in paragraphs 16-149 above, the Educate Defendants

committed unfair or deceptive acts or practices in violation of the CSPA, O.R.C. 1345.02(A),

by misrepresenting that the subject of a consumer ti-ansaction has sponsorship, approval,

performance characteristics, uses, or benefits that it did not have, and specifically by (1)

misrepresenting that their services will substantially reduce consumexs credit card interest

rates, (2) misrepresenting that their services have a 100% money-back guarantee, and (3)

misrepresenting that they will send consumers a written agreement packet in the mail after

consumers agree to the service over the telephone.

COUN'l:' ELEVEN (EDUCARE DEFENDANTS)

Using Remotely Created Payment Orders in Connection with Telemarketing

186.

As described in paragraphs 16-149 above, the Educare D efendants

committed unfair or deceptive acts or practices in violation of the CSPA, 0.R.C. 1345.02(A),

by 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.

VIOLATIONS OF THE OHIO TELEPHONE SOLICITATION SALES ACT

(by the State of Ohio)

187.

Defendants initiated "telephone solicitations" to "purchasers," as they were

at all times relevant herein, engaged in in.itiati.ng "communications" on behalf of "telephone

solicitors" or "salespersons" to induce persons to purchases "goods or services," as those

terms are defined in the T SSA, 0.R.C. 4719.0t (A).

188.

Defendants are "telephone solicito1-s" as that term is defined in the TSSA,

O.R.C. 4719.0t(A)(B), as they wete at all ti.mes relevant herein, engaged in initiating

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telephone solicitations directly or duough one or more salespersons from a location in Ohio

or from a location outside of Ohio to persons in Ohio.

COUNT TWELVE (EDU CARE DEFENDANTS)

Failure to Comply with Registration and Surety Bond Requirements

189.

As described in paragraphs 16-149 above, the Educate Defendants

co1111rutted unfair or deceptive acts and practices in violation of the TSSA, O.R.C.

4719.02(A) and 4719.04(A), and tl1e CSPA, O.R.C. 1345.02(A), by acting as a telephone

solicitor without first having obtained a certificate of registration from the Ohio Attorne)'

General, and filing a copy of a su.tety bond in the amount of at least fifty thousand dollars

with the Ohio Attorney Gene.ta}.

COUNT THIRTEEN (EDUCARE DEFENDANTS)

Failure to Disclose the True Name of the Solicitor and Business

190.

As described in paragraphs 16-149 above, the Educare Defendants

committed unfair or deceptive acts and practices in violation of the TSSA, O.R.C.

4719.06(A) and the CSPA, O.R.C. 1345.02(A), by failing to disclose the solicitor's ttue name

and tlle name of the company on ,vhose behalf solicitations were made, with.in the first sixty

seconds of the telephone call.

COUNT FOURTEEN (EDUCARE DEPENDANTS)

Failure to Obtain Signed Written Confirmation of Sales

191.

As described in pa1'agraphs 16-149 above, the Educate D efendants

committed unfair or deceptive acts and practices in violation of the TSSA, O.R.C. 4719.07

and tlle CSPA, O.R.C. 1345.0Z(A), by taking payment fron1 a consumer as the result of a

telephone solicitation and not providing to, and receiving back from tlle consumer, a written

confirmation that meets the requirements of O.R.C. 4719.07.

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CONSUMER INJURY

192.

Consumers are suffering, have suffered, and will continue to suffer

substantial i.nju1-y as a result of Defendants' violations of the FTC Act, the TSR, the CSPA,

and the TSSA.

193.

The Educate Defendants' fraudulent telema1·keting scheme has caused more

than $11.5 million to be withdrawn from consumers' checking accounts. In addition,

Defendants have been unjustly enriched as a result of their unlawful acts or practices.

Absent injunctive relief by this Court, Defendants are likely to continue to injure consumers,

reap unjust enrichment, and harm the public interest.

T HIS COURT ' S POWER 'TO GRANT RELIEF

194.

Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers th.is Court. to

grant injunctive and such other relief as the Court may deem appropriate to halt a11d redress

violations of any provision of law enforced by the FTC.

195.

The Court, in the exercise of its equitable ju1isdictlon, may award.ancillary

relief, .including rescission or reformation of contracts, restitution, the refund of monies

paid, and the disgorgement of ill-gotten monies, to pre,rent and remedy any violation of any

provision of law enforced by the FTC.

196.

Pw:suaot to 28 U.S.C. § 1367, this Court has supplemental jurisdiction to

allow Plairitiff State of Ohio, Office of Attorney General, to enforce its state law claims

against Defendltnts .in tJ,js Court for violations of tl1e CSPA and the TSSA, including

.injunctive relief,.rescission or reformation of contracts, the refund of monies paid; and the

d.isgorgement of ill-gotten monies.

PRAYER FOR RELIEF

WHEREFORE, Plaintiffs rTC and the State of Ohio, pursuant to Sections 13(b)

and 19 of the FTC Act, 15 U.S.C. §§ 53(b), 57b; the TSR; Section 1345.07 of the Ohio

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CSPA; Section 4719.22 of the Ohio TSSJ\; and the Coutt's own equitable powers, request

that the Court:

Award Plaintiffs such preliminary injunctive and ancillary relief as may be

necessary to avert the likelihood of consumer inju1-y during the pendency of this action and

to preserve the possibility of effective final relief, including temporary and preliminary

injunctions, m1d an order providing for the turnover. of business records, an asset freeze,

immediate access, the appointment of a receiver, and disruption of telephone service;

Enter a permanent injunction to prevent future violations of the FTC Act,

the TSR, the Ohio CSPA, and the Ohio TSSA by Defendants;

Award Plaintiffs such relief as the Court finds necessary to redress inju1y to

consumers resulting from Defendants' violations of the FTC Act, the TSR, the Ohio CSPA,

and the Ohlo TSSA, including rescission or reformation of contracts, restitution, the refund

of monies paid, and the disgorgement of ill-gotten monies; and

Award Plaintiffs the costs of bringing this action, as well as such other and

additional relief as the Court may determine to be just and proper;

Respectfully submitted,

ALDEN F. ABBOTT

·23

Dated:

Chcistp

er E. Brown

J. Ronald Brooke, Jr.

Federal Trade Commission

600 Pennsylvania Ave., NW

Mailstop CC-8528

Washington, DC 20580

(202) 326-2825 / cbrown3@ftc.gov

(202) 326-3484 / jbi:ooke@ftc.gov

Attorneys for Plaintiff

FEDERAL TRADE COMMISSION

DAVE YOST

Ohio Attorney General

' '

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Erin Leahy (Ohio Bar #69509)

Assistant A ttomeys General

Consumer Protection Section

30 E. Broad Street, 141h Floor

Columbus, Ohio 43215 ·

(614) 466-8831

e.cin.leahy@OhioAttorneyGeneraLgov

Attorneys for PWntiff

STATE OF OHIO

Attorneys for Plaintiff

STATE OF OHIO

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