# UNITED STATES OF AMERICA > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Ac046dfa0691ada08 ## Record - **Collection:** Agency decision - **Document type:** Agency decision ## Text UNITED STATES OF AMERICA FEDERAL TRADE COMMISSION WASHINGTON, DC 20580 Bureau of Consumer Protection Division of Marketing Practices Lois C. Greisman Associate Director March 27, 2020 VIA FEDEX AND PDF EMAIL ATTACHMENT Comet Media, Inc. Attn: Sam Sudderth Wilmington, Delaware Warning Regarding Assisting and Facilitating Illegal Robocalls Related to Coronavirus/COVID-19 Dear Mr. Sudderth: 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 1 A copy of the TSR is attached as Appendix A. 2 In fiscal year 2019, the FTC received more than 5.4 million complaints about unwanted calls, including more than 3.7 million robocall complaints. The FTC maintains an interactive Tableau Public web page that publishes details about do not call complaints on a quarterly basis. See public.tableau.com/profile/federal.trade.commission#!/vizhome/DoNotCallComplaints/Maps. 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) 3 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. 381 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00391 EC29SE91.044 kpayne on DSK54DXVN1OFR with $$_JOB Sec. 310.1 Scope of regulations in this part. 310.2 Definitions. 310.3 Deceptive telemarketing acts or practices. 310.4 Abusive telemarketing acts or practices. 310.5 Recordkeeping requirements. 310.6 Exemptions. 310.7 Actions by states and private persons. 310.8 Fee for access to the National Do Not Call Registry. 310.9 Severability. § 310.1 Scope of regulations in this part. This part implements the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. 61016108, as amended. kpayne on DSK54DXVN1OFR with $$_JOB § 310.2 16 CFR Ch. I (1–1–18 Edition) (b) Attorney General means the chief legal officer of a state. (c) Billing information means any data that enables any person to access a customer’s or donor’s account, such as a credit card, checking, savings, share or similar account, utility bill, mortgage loan account, or debit card. (d) Caller identification service means a service that allows a telephone subscriber to have the telephone number, and, where available, name of the calling party transmitted contemporaneously with the telephone call, and displayed on a device in or connected to the subscriber’s telephone. (e) Cardholder means a person to whom a credit card is issued or who is authorized to use a credit card on behalf of or in addition to the person to whom the credit card is issued. (f) Cash-to-cash money transfer means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) transfer of the value of cash received from one person to another person in a different location that is sent by a money transfer provider and received in the form of cash. For purposes of this definition, money transfer provider means any person or financial institution that provides cash-to-cash money transfers for a person in the normal course of its business, whether or not the person holds an account with such person or financial institution. The term cash-to-cash money transfer includes a remittance transfer, as defined in section 919(g)(2) of the Electronic Fund Transfer Act (‘‘EFTA’’), 15 U.S.C. 1693a, that is a cash-to-cash transaction; however it does not include any transaction that is: (1) An electronic fund transfer as defined in section 903 of the EFTA; (2) Covered by Regulation E, 12 CFR 1005.20, pertaining to gift cards; or (3) Subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq. (g) Cash reload mechanism is a device, authorization code, personal identification number, or other security measure that makes it possible for a person to convert cash into an electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act (15 U.S.C. 7006(2)) form that can be used to add funds to a general-use prepaid card, as defined in Regulation E, 12 CFR 1005.2, or an account with a payment intermediary. For purposes of this definition, a cash reload mechanism is not itself a general-use prepaid debit card or a swipe reload process or similar method in which funds are added directly onto a person’s own general-use prepaid card or account with a payment intermediary. (h) Charitable contribution means any donation or gift of money or any other thing of value. (i) Commission means the Federal Trade Commission. (j) Credit means the right granted by a creditor to a debtor to defer payment of debt or to incur debt and defer its payment. (k) Credit card means any card, plate, coupon book, or other credit device existing for the purpose of obtaining money, property, labor, or services on credit. (l) Credit card sales draft means any record or evidence of a credit card transaction. (m) Credit card system means any method or procedure used to process credit card transactions involving credit cards issued or licensed by the operator of that system. (n) Customer means any person who is or may be required to pay for goods or services offered through telemarketing. (o) Debt relief service means any program or service represented, directly or by implication, to renegotiate, settle, or in any way alter the terms of payment or other terms of the debt between a person and one or more unsecured creditors or debt collectors, including, but not limited to, a reduction in the balance, interest rate, or fees owed by a person to an unsecured creditor or debt collector. (p) Donor means any person solicited to make a charitable contribution. (q) Established business relationship means a relationship between a seller and a consumer based on: (1) the consumer’s purchase, rental, or lease of the seller’s goods or services or a financial transaction between the 382 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00392 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.2 consumer and seller, within the eighteen (18) months immediately preceding the date of a telemarketing call; or (2) the consumer’s inquiry or application regarding a product or service offered by the seller, within the three (3) months immediately preceding the date of a telemarketing call. (r) Free-to-pay conversion means, in an offer or agreement to sell or provide any goods or services, a provision under which a customer receives a product or service for free for an initial period and will incur an obligation to pay for the product or service if he or she does not take affirmative action to cancel before the end of that period. (s) Investment opportunity means anything, tangible or intangible, that is offered, offered for sale, sold, or traded based wholly or in part on representations, either express or implied, about past, present, or future income, profit, or appreciation. (t) Material means likely to affect a person’s choice of, or conduct regarding, goods or services or a charitable contribution. (u) Merchant means a person who is authorized under a written contract with an acquirer to honor or accept credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution. (v) Merchant agreement means a written contract between a merchant and an acquirer to honor or accept credit cards, or to transmit or process for payment credit card payments, for the purchase of goods or services or a charitable contribution. (w) Negative option feature means, in an offer or agreement to sell or provide any goods or services, a provision under which the customer’s silence or failure to take an affirmative action to reject goods or services or to cancel the agreement is interpreted by the seller as acceptance of the offer. (x) Outbound telephone call means a telephone call initiated by a telemarketer to induce the purchase of goods or services or to solicit a charitable contribution. (y) Person means any individual, group, unincorporated association, limited or general partnership, corporation, or other business entity. (z) Preacquired account information means any information that enables a seller or telemarketer to cause a charge to be placed against a customer’s or donor’s account without obtaining the account number directly from the customer or donor during the telemarketing transaction pursuant to which the account will be charged. (aa) Prize means anything offered, or purportedly offered, and given, or purportedly given, to a person by chance. For purposes of this definition, chance exists if a person is guaranteed to receive an item and, at the time of the offer or purported offer, the telemarketer does not identify the specific item that the person will receive. (bb) Prize promotion means: (1) A sweepstakes or other game of chance; or (2) An oral or written express or implied representation that a person has won, has been selected to receive, or may be eligible to receive a prize or purported prize. (cc) Remotely created payment order means any payment instruction or order drawn on a person’s account that is created by the payee or the payee’s agent and deposited into or cleared through the check clearing system. The term includes, without limitation, a ‘‘remotely created check,’’ as defined in Regulation CC, Availability of Funds and Collection of Checks, 12 CFR 229.2(fff), but does not include a payment order cleared through an Automated Clearinghouse (ACH) Network or subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 1026. (dd) Seller means any person who, in connection with a telemarketing transaction, provides, offers to provide, or arranges for others to provide goods or services to the customer in exchange for consideration. (ee) State means any state of the United States, the District of Columbia, Puerto Rico, the Northern Mariana Islands, and any territory or possession of the United States. (ff) Telemarketer means any person who, in connection with telemarketing, initiates or receives telephone calls to or from a customer or donor. (gg) Telemarketing means a plan, program, or campaign which is conducted 383 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00393 § 310.3 16 CFR Ch. I (1–1–18 Edition) to induce the purchase of goods or services or a charitable contribution, by use of one or more telephones and which involves more than one interstate telephone call. The term does not include the solicitation of sales through the mailing of a catalog which: contains a written description or illustration of the goods or services offered for sale; includes the business address of the seller; includes multiple pages of written material or illustrations; and has been issued not less frequently than once a year, when the person making the solicitation does not solicit customers by telephone but only receives calls initiated by customers in response to the catalog and during those calls takes orders only without further solicitation. For purposes of the previous sentence, the term ‘‘further solicitation’’ does not include providing the customer with information about, or attempting to sell, any other item included in the same catalog which prompted the customer’s call or in a substantially similar catalog. (hh) Upselling means soliciting the purchase of goods or services following an initial transaction during a single telephone call. The upsell is a separate telemarketing transaction, not a continuation of the initial transaction. An ‘‘external upsell’’ is a solicitation made by or on behalf of a seller different from the seller in the initial transaction, regardless of whether the initial transaction and the subsequent solicitation are made by the same telemarketer. An ‘‘internal upsell’’ is a solicitation made by or on behalf of the same seller as in the initial transaction, regardless of whether the initial transaction and subsequent solicitation are made by the same telemarketer. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77557, Dec. 14, 2015] kpayne on DSK54DXVN1OFR with $$_JOB § 310.3 Deceptive telemarketing acts or practices. (a) Prohibited deceptive telemarketing acts or practices. It is a deceptive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engage in the following conduct: (1) Before a customer consents to pay 659 for goods or services offered, failing to disclose truthfully, in a clear and conspicuous manner, the following material information: (i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of the sales offer; 660 (ii) All material restrictions, limitations, or conditions to purchase, receive, or use the goods or services that are the subject of the sales offer; (iii) If the seller has a policy of not making refunds, cancellations, exchanges, or repurchases, a statement informing the customer that this is the seller’s policy; or, if the seller or telemarketer makes a representation about a refund, cancellation, exchange, or repurchase policy, a statement of all material terms and conditions of such policy; (iv) In any prize promotion, the odds of being able to receive the prize, and, if the odds are not calculable in advance, the factors used in calculating the odds; that no purchase or payment is required to win a prize or to participate in a prize promotion and that any purchase or payment will not increase the person’s chances of winning; and the no-purchase/no-payment method of participating in the prize promotion with either instructions on how to participate or an address or local or tollfree telephone number to which customers may write or call for information on how to participate; 659 When a seller or telemarketer uses, or directs a customer to use, a courier to transport payment, the seller or telemarketer must make the disclosures required by § 310.3(a)(1) before sending a courier to pick up payment or authorization for payment, or directing a customer to have a courier pick up payment or authorization for payment. In the case of debt relief services, the seller or telemarketer must make the disclosures required by § 310.3(a)(1) before the consumer enrolls in an offered program. 660 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, compliance with the disclosure requirements under the Truth in Lending Act and Regulation Z shall constitute compliance with § 310.3(a)(1)(i) of this Rule. 384 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00394 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.3 (v) All material costs or conditions to receive or redeem a prize that is the subject of the prize promotion; (vi) In the sale of any goods or services represented to protect, insure, or otherwise limit a customer’s liability in the event of unauthorized use of the customer’s credit card, the limits on a cardholder’s liability for unauthorized use of a credit card pursuant to 15 U.S.C. 1643; (vii) If the offer includes a negative option feature, all material terms and conditions of the negative option feature, including, but not limited to, the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s); and (viii) In the sale of any debt relief service: (A) the amount of time necessary to achieve the represented results, and to the extent that the service may include a settlement offer to any of the customer’s creditors or debt collectors, the time by which the debt relief service provider will make a bona fide settlement offer to each of them; (B) to the extent that the service may include a settlement offer to any of the customer’s creditors or debt collectors, the amount of money or the percentage of each outstanding debt that the customer must accumulate before the debt relief service provider will make a bona fide settlement offer to each of them; (C) to the extent that any aspect of the debt relief service relies upon or results in the customer’s failure to make timely payments to creditors or debt collectors, that the use of the debt relief service will likely adversely affect the customer’s creditworthiness, may result in the customer being subject to collections or sued by creditors or debt collectors, and may increase the amount of money the customer owes due to the accrual of fees and interest; and (D) to the extent that the debt relief service requests or requires the customer to place funds in an account at an insured financial institution, that the customer owns the funds held in the account, the customer may withdraw from the debt relief service at any time without penalty, and, if the customer withdraws, the customer must receive all funds in the account, other than funds earned by the debt relief service in compliance with § 310.4(a)(5)(i)(A) through (C). (2) Misrepresenting, directly or by implication, in the sale of goods or services any of the following material information: (i) The total costs to purchase, receive, or use, and the quantity of, any goods or services that are the subject of a sales offer; (ii) Any material restriction, limitation, or condition to purchase, receive, or use goods or services that are the subject of a sales offer; (iii) Any material aspect of the performance, efficacy, nature, or central characteristics of goods or services that are the subject of a sales offer; (iv) Any material aspect of the nature or terms of the seller’s refund, cancellation, exchange, or repurchase policies; (v) Any material aspect of a prize promotion including, but not limited to, the odds of being able to receive a prize, the nature or value of a prize, or that a purchase or payment is required to win a prize or to participate in a prize promotion; (vi) Any material aspect of an investment opportunity including, but not limited to, risk, liquidity, earnings potential, or profitability; (vii) A seller’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity; (viii) That any customer needs offered goods or services to provide protections a customer already has pursuant to 15 U.S.C. 1643; (ix) Any material aspect of a negative option feature including, but not limited to, the fact that the customer’s account will be charged unless the customer takes an affirmative action to avoid the charge(s), the date(s) the charge(s) will be submitted for payment, and the specific steps the customer must take to avoid the charge(s); or 385 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00395 § 310.3 16 CFR Ch. I (1–1–18 Edition) kpayne on DSK54DXVN1OFR with $$_JOB (x) Any material aspect of any debt relief service, including, but not limited to, the amount of money or the percentage of the debt amount that a customer may save by using such service; the amount of time necessary to achieve the represented results; the amount of money or the percentage of each outstanding debt that the customer must accumulate before the provider of the debt relief service will initiate attempts with the customer’s creditors or debt collectors or make a bona fide offer to negotiate, settle, or modify the terms of the customer’s debt; the effect of the service on a customer’s creditworthiness; the effect of the service on collection efforts of the customer’s creditors or debt collectors; the percentage or number of customers who attain the represented results; and whether a debt relief service is offered or provided by a non-profit entity. (3) Causing billing information to be submitted for payment, or collecting or attempting to collect payment for goods or services or a charitable contribution, directly or indirectly, without the customer’s or donor’s express verifiable authorization, except when the method of payment used is a credit card subject to protections of the Truth in Lending Act and Regulation Z,661 or a debit card subject to the protections of the Electronic Fund Transfer Act and Regulation E.662 Such authorization shall be deemed verifiable if any of the following means is employed: (i) Express written authorization by the customer or donor, which includes the customer’s or donor’s signature;663 (ii) Express oral authorization which is audio-recorded and made available upon request to the customer or donor, and the customer’s or donor’s bank or other billing entity, and which evidences clearly both the customer’s or 661 Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR part 226. 662 Electronic Fund Transfer Act, 15 U.S.C. 1693 et seq., and Regulation E, 12 CFR part 205. 663 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. donor’s authorization of payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction and the customer’s or donor’s receipt of all of the following information: (A) An accurate description, clearly and conspicuously stated, of the goods or services or charitable contribution for which payment authorization is sought; (B) The number of debits, charges, or payments (if more than one); (C) The date(s) the debit(s), charge(s), or payment(s) will be submitted for payment; (D) The amount(s) of the debit(s), charge(s), or payment(s); (E) The customer’s or donor’s name; (F) The customer’s or donor’s billing information, identified with sufficient specificity such that the customer or donor understands what account will be used to collect payment for the goods or services or charitable contribution that are the subject of the telemarketing transaction; (G) A telephone number for customer or donor inquiry that is answered during normal business hours; and (H) The date of the customer’s or donor’s oral authorization; or (iii) Written confirmation of the transaction, identified in a clear and conspicuous manner as such on the outside of the envelope, sent to the customer or donor via first class mail prior to the submission for payment of the customer’s or donor’s billing information, and that includes all of the information contained in §§ 310.3(a)(3)(ii)(A)-(G) and a clear and conspicuous statement of the procedures by which the customer or donor can obtain a refund from the seller or telemarketer or charitable organization in the event the confirmation is inaccurate; provided, however, that this means of authorization shall not be deemed verifiable in instances in which goods or services are offered in a transaction involving a free-to-pay conversion and preacquired account information. (4) Making a false or misleading statement to induce any person to pay for goods or services or to induce a charitable contribution. 386 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00396 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 (b) Assisting and facilitating. It is a deceptive telemarketing act or practice and a violation of this Rule for a person to provide substantial assistance or support to any seller or telemarketer when that person knows or consciously avoids knowing that the seller or telemarketer is engaged in any act or practice that violates §§ 310.3(a), (c) or (d), or § 310.4 of this Rule. (c) Credit card laundering. Except as expressly permitted by the applicable credit card system, it is a deceptive telemarketing act or practice and a violation of this Rule for: (1) A merchant to present to or deposit into, or cause another to present to or deposit into, the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; (2) Any person to employ, solicit, or otherwise cause a merchant, or an employee, representative, or agent of the merchant, to present to or deposit into the credit card system for payment, a credit card sales draft generated by a telemarketing transaction that is not the result of a telemarketing credit card transaction between the cardholder and the merchant; or (3) Any person to obtain access to the credit card system through the use of a business relationship or an affiliation with a merchant, when such access is not authorized by the merchant agreement or the applicable credit card system. (d) Prohibited deceptive acts or practices in the solicitation of charitable contributions. It is a fraudulent charitable solicitation, a deceptive telemarketing act or practice, and a violation of this Rule for any telemarketer soliciting charitable contributions to misrepresent, directly or by implication, any of the following material information: (1) The nature, purpose, or mission of any entity on behalf of which a charitable contribution is being requested; (2) That any charitable contribution is tax deductible in whole or in part; (3) The purpose for which any charitable contribution will be used; (4) The percentage or amount of any charitable contribution that will go to a charitable organization or to any particular charitable program; (5) Any material aspect of a prize promotion including, but not limited to: the odds of being able to receive a prize; the nature or value of a prize; or that a charitable contribution is required to win a prize or to participate in a prize promotion; or (6) A charitable organization’s or telemarketer’s affiliation with, or endorsement or sponsorship by, any person or government entity. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77558, Dec. 14, 2015] § 310.4 Abusive telemarketing acts or practices. (a) Abusive conduct generally. It is an abusive telemarketing act or practice and a violation of this Rule for any seller or telemarketer to engage in the following conduct: (1) Threats, intimidation, or the use of profane or obscene language; (2) Requesting or receiving payment of any fee or consideration for goods or services represented to remove derogatory information from, or improve, a person’s credit history, credit record, or credit rating until: (i) The time frame in which the seller has represented all of the goods or services will be provided to that person has expired; and (ii) The seller has provided the person with documentation in the form of a consumer report from a consumer reporting agency demonstrating that the promised results have been achieved, such report having been issued more than six months after the results were achieved. Nothing in this Rule should be construed to affect the requirement in the Fair Credit Reporting Act, 15 U.S.C. 1681, that a consumer report may only be obtained for a specified permissible purpose; (3) Requesting or receiving payment of any fee or consideration from a person for goods or services represented to recover or otherwise assist in the return of money or any other item of value paid for by, or promised to, that person in a previous transaction, until seven (7) business days after such money or other item is delivered to that person. This provision shall not 387 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00397 kpayne on DSK54DXVN1OFR with $$_JOB § 310.4 16 CFR Ch. I (1–1–18 Edition) apply to goods or services provided to a person by a licensed attorney; (4) Requesting or receiving payment of any fee or consideration in advance of obtaining a loan or other extension of credit when the seller or telemarketer has guaranteed or represented a high likelihood of success in obtaining or arranging a loan or other extension of credit for a person; (5)(i) Requesting or receiving payment of any fee or consideration for any debt relief service until and unless: (A) The seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt management plan, or other such valid contractual agreement executed by the customer; (B) The customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and the creditor or debt collector; and (C) To the extent that debts enrolled in a service are renegotiated, settled, reduced, or otherwise altered individually, the fee or consideration either: (1) Bears the same proportional relationship to the total fee for renegotiating, settling, reducing, or altering the terms of the entire debt balance as the individual debt amount bears to the entire debt amount. The individual debt amount and the entire debt amount are those owed at the time the debt was enrolled in the service; or (2) Is a percentage of the amount saved as a result of the renegotiation, settlement, reduction, or alteration. The percentage charged cannot change from one individual debt to another. The amount saved is the difference between the amount owed at the time the debt was enrolled in the service and the amount actually paid to satisfy the debt. (ii) Nothing in § 310.4(a)(5)(i) prohibits requesting or requiring the customer to place funds in an account to be used for the debt relief provider’s fees and for payments to creditors or debt collectors in connection with the renegotiation, settlement, reduction, or other alteration of the terms of payment or other terms of a debt, provided that: (A) The funds are held in an account at an insured financial institution; (B) The customer owns the funds held in the account and is paid accrued interest on the account, if any; (C) The entity administering the account is not owned or controlled by, or in any way affiliated with, the debt relief service; (D) The entity administering the account does not give or accept any money or other compensation in exchange for referrals of business involving the debt relief service; and (E) The customer may withdraw from the debt relief service at any time without penalty, and must receive all funds in the account, other than funds earned by the debt relief service in compliance with § 310.4(a)(5)(i)(A) through (C), within seven (7) business days of the customer’s request. (6) Disclosing or receiving, for consideration, unencrypted consumer account numbers for use in telemarketing; provided, however, that this paragraph shall not apply to the disclosure or receipt of a customer’s or donor’s billing information to process a payment for goods or services or a charitable contribution pursuant to a transaction; (7) Causing billing information to be submitted for payment, directly or indirectly, without the express informed consent of the customer or donor. In any telemarketing transaction, the seller or telemarketer must obtain the express informed consent of the customer or donor to be charged for the goods or services or charitable contribution and to be charged using the identified account. In any telemarketing transaction involving preacquired account information, the requirements in paragraphs (a)(7)(i) through (ii) of this section must be met to evidence express informed consent. (i) In any telemarketing transaction involving preacquired account information and a free-to-pay conversion feature, the seller or telemarketer must: (A) Obtain from the customer, at a minimum, the last four (4) digits of the account number to be charged; (B) Obtain from the customer his or her express agreement to be charged for the goods or services and to be 388 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00398 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 charged using the account number pursuant to paragraph (a)(7)(i)(A) of this section; and, (C) Make and maintain an audio recording of the entire telemarketing transaction. (ii) In any other telemarketing transaction involving preacquired account information not described in paragraph (a)(7)(i) of this section, the seller or telemarketer must: (A) At a minimum, identify the account to be charged with sufficient specificity for the customer or donor to understand what account will be charged; and (B) Obtain from the customer or donor his or her express agreement to be charged for the goods or services and to be charged using the account number identified pursuant to paragraph (a)(7)(ii)(A) of this section; (8) Failing to transmit or cause to be transmitted the telephone number, and, when made available by the telemarketer’s carrier, the name of the telemarketer, to any caller identification service in use by a recipient of a telemarketing call; provided that it shall not be a violation to substitute (for the name and phone number used in, or billed for, making the call) the name of the seller or charitable organization on behalf of which a telemarketing call is placed, and the seller’s or charitable organization’s customer or donor service telephone number, which is answered during regular business hours; (9) Creating or causing to be created, directly or indirectly, a remotely created payment order as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or sought through telemarketing; or (10) Accepting from a customer or donor, directly or indirectly, a cash-tocash money transfer or cash reload mechanism as payment for goods or services offered or sold through telemarketing or as a charitable contribution solicited or sought through telemarketing. (b) Pattern of calls. (1) It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in, or for a seller to cause a telemarketer to engage in, the following conduct: (i) Causing any telephone to ring, or engaging any person in telephone conversation, repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number; (ii) Denying or interfering in any way, directly or indirectly, with a person’s right to be placed on any registry of names and/or telephone numbers of persons who do not wish to receive outbound telephone calls established to comply with paragraph (b)(1)(iii)(A) of this section, including, but not limited to, harassing any person who makes such a request; hanging up on that person; failing to honor the request; requiring the person to listen to a sales pitch before accepting the request; assessing a charge or fee for honoring the request; requiring a person to call a different number to submit the request; and requiring the person to identify the seller making the call or on whose behalf the call is made; (iii) Initiating any outbound telephone call to a person when: (A) That person previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the seller whose goods or services are being offered or made on behalf of the charitable organization for which a charitable contribution is being solicited; or (B) That person’s telephone number is on the ‘‘do-not-call’’ registry, maintained by the Commission, of persons who do not wish to receive outbound telephone calls to induce the purchase of goods or services unless the seller or telemarketer: (1) Can demonstrate that the seller has obtained the express agreement, in writing, of such person to place calls to that person. Such written agreement shall clearly evidence such person’s authorization that calls made by or on behalf of a specific party may be placed to that person, and shall include the telephone number to which the calls may be placed and the signature 664 of that person; or 664 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a 389 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00399 Continued § 310.4 16 CFR Ch. I (1–1–18 Edition) kpayne on DSK54DXVN1OFR with $$_JOB (2) Can demonstrate that the seller has an established business relationship with such person, and that person has not stated that he or she does not wish to receive outbound telephone calls under paragraph (b)(1)(iii)(A) of this section; or (iv) Abandoning any outbound telephone call. An outbound telephone call is ‘‘abandoned’’ under this section if a person answers it and the telemarketer does not connect the call to a sales representative within two (2) seconds of the person’s completed greeting. (v) Initiating any outbound telephone call that delivers a prerecorded message, other than a prerecorded message permitted for compliance with the call abandonment safe harbor in § 310.4(b)(4)(iii), unless: (A) In any such call to induce the purchase of any good or service, the seller has obtained from the recipient of the call an express agreement, in writing, that: (i) The seller obtained only after a clear and conspicuous disclosure that the purpose of the agreement is to authorize the seller to place prerecorded calls to such person; (ii) The seller obtained without requiring, directly or indirectly, that the agreement be executed as a condition of purchasing any good or service; (iii) Evidences the willingness of the recipient of the call to receive calls that deliver prerecorded messages by or on behalf of a specific seller; and (iv) Includes such person’s telephone number and signature;665 and (B) In any such call to induce the purchase of any good or service, or to induce a charitable contribution from a member of, or previous donor to, a nonprofit charitable organization on whose behalf the call is made, the seller or telemarketer: (i) Allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; and valid signature under applicable federal law or state contract law. 665 For purposes of this Rule, the term ‘‘signature’’ shall include an electronic or digital form of signature, to the extent that such form of signature is recognized as a valid signature under applicable federal law or state contract law. (ii) Within two (2) seconds after the completed greeting of the person called, plays a prerecorded message that promptly provides the disclosures required by § 310.4(d) or (e), followed immediately by a disclosure of one or both of the following: (A) In the case of a call that could be answered in person by a consumer, that the person called can use an automated interactive voice and/or keypress-activated opt-out mechanism to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A) at any time during the message. The mechanism must: (1) Automatically add the number called to the seller’s entity-specific Do Not Call list; (2) Once invoked, immediately disconnect the call; and (3) Be available for use at any time during the message; and (B) In the case of a call that could be answered by an answering machine or voicemail service, that the person called can use a toll-free telephone number to assert a Do Not Call request pursuant to § 310.4(b)(1)(iii)(A). The number provided must connect directly to an automated interactive voice or keypress-activated opt-out mechanism that: (1) Automatically adds the number called to the seller’s entity-specific Do Not Call list; (2) Immediately thereafter disconnects the call; and (3) Is accessible at any time throughout the duration of the telemarketing campaign; and (iii) Complies with all other requirements of this part and other applicable federal and state laws. (C) Any call that complies with all applicable requirements of this paragraph (v) shall not be deemed to violate § 310.4(b)(1)(iv) of this part. (D) This paragraph (v) shall not apply to any outbound telephone call that delivers a prerecorded healthcare message made by, or on behalf of, a covered entity or its business associate, as those terms are defined in the HIPAA Privacy Rule, 45 CFR 160.103. (2) It is an abusive telemarketing act or practice and a violation of this Rule for any person to sell, rent, lease, purchase, or use any list established to comply with § 310.4(b)(1)(iii)(A), or 390 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00400 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.4 maintained by the Commission pursuant to § 310.4(b)(1)(iii)(B), for any purpose except compliance with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on such lists. (3) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(ii) and (iii) if it can demonstrate that, as part of the seller’s or telemarketer’s routine business practice: (i) It has established and implemented written procedures to comply with § 310.4(b)(1)(ii) and (iii); (ii) It has trained its personnel, and any entity assisting in its compliance, in the procedures established pursuant to § 310.4(b)(3)(i); (iii) The seller, or a telemarketer or another person acting on behalf of the seller or charitable organization, has maintained and recorded a list of telephone numbers the seller or charitable organization may not contact, in compliance with § 310.4(b)(1)(iii)(A); (iv) The seller or a telemarketer uses a process to prevent telemarketing to any telephone number on any list established pursuant to § 310.4(b)(3)(iii) or 310.4(b)(1)(iii)(B), employing a version of the ‘‘do-not-call’’ registry obtained from the Commission no more than thirty-one (31) days prior to the date any call is made, and maintains records documenting this process; (v) The seller or a telemarketer or another person acting on behalf of the seller or charitable organization, monitors and enforces compliance with the procedures established pursuant to § 310.4(b)(3)(i); and (vi) Any subsequent call otherwise violating paragraph (b)(1)(ii) or (iii) of this section is the result of error and not of failure to obtain any information necessary to comply with a request pursuant to paragraph (b)(1)(iii)(A) of this section not to receive further calls by or on behalf of a seller or charitable organization. (4) A seller or telemarketer will not be liable for violating § 310.4(b)(1)(iv) if: (i) The seller or telemarketer employs technology that ensures abandonment of no more than three (3) percent of all calls answered by a person, measured over the duration of a single calling campaign, if less than 30 days, or separately over each successive 30- day period or portion thereof that the campaign continues. (ii) The seller or telemarketer, for each telemarketing call placed, allows the telephone to ring for at least fifteen (15) seconds or four (4) rings before disconnecting an unanswered call; (iii) Whenever a sales representative is not available to speak with the person answering the call within two (2) seconds after the person’s completed greeting, the seller or telemarketer promptly plays a recorded message that states the name and telephone number of the seller on whose behalf the call was placed666; and (iv) The seller or telemarketer, in accordance with § 310.5(b)-(d), retains records establishing compliance with § 310.4(b)(4)(i)-(iii). (c) Calling time restrictions. Without the prior consent of a person, it is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer to engage in outbound telephone calls to a person’s residence at any time other than between 8:00 a.m. and 9:00 p.m. local time at the called person’s location. (d) Required oral disclosures in the sale of goods or services. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer in an outbound telephone call or internal or external upsell to induce the purchase of goods or services to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the following information: (1) The identity of the seller; (2) That the purpose of the call is to sell goods or services; (3) The nature of the goods or services; and (4) That no purchase or payment is necessary to be able to win a prize or participate in a prize promotion if a prize promotion is offered and that any purchase or payment will not increase the person’s chances of winning. This disclosure must be made before or in conjunction with the description of the prize to the person called. If requested 666 This provision does not affect any seller’s or telemarketer’s obligation to comply with relevant state and federal laws, including but not limited to the TCPA, 47 U.S.C. 227, and 47 CFR part 64.1200. 391 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00401 § 310.5 16 CFR Ch. I (1–1–18 Edition) by that person, the telemarketer must disclose the no-purchase/no-payment entry method for the prize promotion; provided, however, that, in any internal upsell for the sale of goods or services, the seller or telemarketer must provide the disclosures listed in this section only to the extent that the information in the upsell differs from the disclosures provided in the initial telemarketing transaction. (e) Required oral disclosures in charitable solicitations. It is an abusive telemarketing act or practice and a violation of this Rule for a telemarketer, in an outbound telephone call to induce a charitable contribution, to fail to disclose truthfully, promptly, and in a clear and conspicuous manner to the person receiving the call, the following information: (1) The identity of the charitable organization on behalf of which the request is being made; and (2) That the purpose of the call is to solicit a charitable contribution. [75 FR 48516, Aug. 10, 2010, as amended at 76 FR 58716, Sept. 22, 2011; 80 FR 77559, Dec. 14, 2015] § 310.5 Recordkeeping requirements. (a) Any seller or telemarketer shall keep, for a period of 24 months from the date the record is produced, the following records relating to its telemarketing activities: (1) All substantially different advertising, brochures, telemarketing scripts, and promotional materials; (2) The name and last known address of each prize recipient and the prize awarded for prizes that are represented, directly or by implication, to have a value of $25.00 or more; (3) The name and last known address of each customer, the goods or services purchased, the date such goods or services were shipped or provided, and the amount paid by the customer for the goods or services;667 (4) The name, any fictitious name used, the last known home address and kpayne on DSK54DXVN1OFR with $$_JOB 667 For offers of consumer credit products subject to the Truth in Lending Act, 15 U.S.C. 1601 et seq., and Regulation Z, 12 CFR 226, compliance with the recordkeeping requirements under the Truth in Lending Act, and Regulation Z, shall constitute compliance with § 310.5(a)(3) of this Rule. telephone number, and the job title(s) for all current and former employees directly involved in telephone sales or solicitations; provided, however, that if the seller or telemarketer permits fictitious names to be used by employees, each fictitious name must be traceable to only one specific employee; and (5) All verifiable authorizations or records of express informed consent or express agreement required to be provided or received under this Rule. (b) A seller or telemarketer may keep the records required by § 310.5(a) in any form, and in the same manner, format, or place as they keep such records in the ordinary course of business. Failure to keep all records required by § 310.5(a) shall be a violation of this Rule. (c) The seller and the telemarketer calling on behalf of the seller may, by written agreement, allocate responsibility between themselves for the recordkeeping required by this Section. When a seller and telemarketer have entered into such an agreement, the terms of that agreement shall govern, and the seller or telemarketer, as the case may be, need not keep records that duplicate those of the other. If the agreement is unclear as to who must maintain any required record(s), or if no such agreement exists, the seller shall be responsible for complying with §§ 310.5(a)(1)-(3) and (5); the telemarketer shall be responsible for complying with § 310.5(a)(4). (d) In the event of any dissolution or termination of the seller’s or telemarketer’s business, the principal of that seller or telemarketer shall maintain all records as required under this section. In the event of any sale, assignment, or other change in ownership of the seller’s or telemarketer’s business, the successor business shall maintain all records required under this section. § 310.6 Exemptions. (a) Solicitations to induce charitable contributions via outbound telephone calls are not covered by § 310.4(b)(1)(iii)(B) of this Rule. (b) The following acts or practices are exempt from this Rule: 392 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00402 kpayne on DSK54DXVN1OFR with $$_JOB Federal Trade Commission § 310.7 (1) The sale of pay-per-call services subject to the Commission’s Rule entitled ‘‘Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992,’’ 16 CFR part 308, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (2) The sale of franchises subject to the Commission’s Rule entitled ‘‘Disclosure Requirements and Prohibitions Concerning Franchising,’’ (‘‘Franchise Rule’’) 16 CFR part 436, and the sale of business opportunities subject to the Commission’s Rule entitled ‘‘Disclosure Requirements and Prohibitions Concerning Business Opportunities,’’ (‘‘Business Opportunity Rule’’) 16 CFR part 437, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (3) Telephone calls in which the sale of goods or services or charitable solicitation is not completed, and payment or authorization of payment is not required, until after a face-to-face sales or donation presentation by the seller or charitable organization, provided, however, that this exemption does not apply to the requirements of §§ 310.4(a)(1), (a)(7), (b), and (c); (4) Telephone calls initiated by a customer or donor that are not the result of any solicitation by a seller, charitable organization, or telemarketer, provided, however, that this exemption does not apply to any instances of upselling included in such telephone calls; (5) Telephone calls initiated by a customer or donor in response to an advertisement through any medium, other than direct mail solicitation, provided, however, that this exemption does not apply to: (i) Calls initiated by a customer or donor in response to an advertisement relating to investment opportunities, debt relief services, business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or advertisements involving offers for goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4); (ii) The requirements of § 310.4(a)(9) or (10); or (iii) Any instances of upselling included in such telephone calls; (6) Telephone calls initiated by a customer or donor in response to a direct mail solicitation, including solicitations via the U.S. Postal Service, facsimile transmission, electronic mail, and other similar methods of delivery in which a solicitation is directed to specific address(es) or person(s), that clearly, conspicuously, and truthfully discloses all material information listed in § 310.3(a)(1), for any goods or services offered in the direct mail solicitation, and that contains no material misrepresentation regarding any item contained in § 310.3(d) for any requested charitable contribution; provided, however, that this exemption does not apply to: (i) Calls initiated by a customer in response to a direct mail solicitation relating to prize promotions, investment opportunities, debt relief services, business opportunities other than business arrangements covered by the Franchise Rule or Business Opportunity Rule, or goods or services described in § 310.3(a)(1)(vi) or § 310.4(a)(2) through (4); (ii) The requirements of § 310.4(a)(9) or (10); or (iii) Any instances of upselling included in such telephone calls; and (7) Telephone calls between a telemarketer and any business to induce the purchase of goods or services or a charitable contribution by the business, except calls to induce the retail sale of nondurable office or cleaning supplies; provided, however, that §§ 310.4(b)(1)(iii)(B) and 310.5 shall not apply to sellers or telemarketers of nondurable office or cleaning supplies. [75 FR 48516, Aug. 10, 2010, as amended at 80 FR 77559, Dec. 14, 2015] § 310.7 Actions by states and private persons. (a) Any attorney general or other officer of a state authorized by the state to bring an action under the Telemarketing and Consumer Fraud and Abuse Prevention Act, and any private person who brings an action under that Act, shall serve written notice of its action on the Commission, if feasible, prior to its initiating an action under this Rule. The notice shall be sent to 393 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00403 § 310.8 16 CFR Ch. I (1–1–18 Edition) the Office of the Director, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580, and shall include a copy of the state’s or private person’s complaint and any other pleadings to be filed with the court. If prior notice is not feasible, the state or private person shall serve the Commission with the required notice immediately upon instituting its action. (b) Nothing contained in this Section shall prohibit any attorney general or other authorized state official from proceeding in state court on the basis of an alleged violation of any civil or criminal statute of such state. kpayne on DSK54DXVN1OFR with $$_JOB § 310.8 Fee for access to the National Do Not Call Registry. (a) It is a violation of this Rule for any seller to initiate, or cause any telemarketer to initiate, an outbound telephone call to any person whose telephone number is within a given area code unless such seller, either directly or through another person, first has paid the annual fee, required by § 310.8(c), for access to telephone numbers within that area code that are included in the National Do Not Call Registry maintained by the Commission under § 310.4(b)(1)(iii)(B); provided, however, that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the seller does not access the National Do Not Call Registry for any other purpose. (b) It is a violation of this Rule for any telemarketer, on behalf of any seller, to initiate an outbound telephone call to any person whose telephone number is within a given area code unless that seller, either directly or through another person, first has paid the annual fee, required by § 310.8(c), for access to the telephone numbers within that area code that are included in the National Do Not Call Registry; provided, however, that such payment is not necessary if the seller initiates, or causes a telemarketer to initiate, calls solely to persons pursuant to §§ 310.4(b)(1)(iii)(B)(i) or (ii), and the seller does not access the National Do Not Call Registry for any other purpose. (c) The annual fee, which must be paid by any person prior to obtaining access to the National Do Not Call Registry, is $62 for each area code of data accessed, up to a maximum of $17,021; provided, however, that there shall be no charge to any person for accessing the first five area codes of data, and provided further, that there shall be no charge to any person engaging in or causing others to engage in outbound telephone calls to consumers and who is accessing area codes of data in the National Do Not Call Registry if the person is permitted to access, but is not required to access, the National Do Not Call Registry under this Rule, 47 CFR 64.1200, or any other Federal regulation or law. No person may participate in any arrangement to share the cost of accessing the National Do Not Call Registry, including any arrangement with any telemarketer or service provider to divide the costs to access the registry among various clients of that telemarketer or service provider. (d) Each person who pays, either directly or through another person, the annual fee set forth in paragraph (c) of this section, each person excepted under paragraph (c) from paying the annual fee, and each person excepted from paying an annual fee under § 310.4(b)(1)(iii)(B), will be provided a unique account number that will allow that person to access the registry data for the selected area codes at any time for the twelve month period beginning on the first day of the month in which the person paid the fee (‘‘the annual period’’). To obtain access to additional area codes of data during the first six months of the annual period, each person required to pay the fee under paragraph (c) of this section must first pay $62 for each additional area code of data not initially selected. To obtain access to additional area codes of data during the second six months of the annual period, each person required to pay the fee under paragraph (c) of this section must first pay $31 for each additional area code of data not initially selected. The payment of the additional fee will permit the person to access the additional area codes of data for the remainder of the annual period. 394 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00404 Federal Trade Commission § 311.4 (e) Access to the National Do Not Call Registry is limited to telemarketers, sellers, others engaged in or causing others to engage in telephone calls to consumers, service providers acting on behalf of such persons, and any government agency that has law enforcement authority. Prior to accessing the National Do Not Call Registry, a person must provide the identifying information required by the operator of the registry to collect the fee, and must certify, under penalty of law, that the person is accessing the registry solely to comply with the provisions of this Rule or to otherwise prevent telephone calls to telephone numbers on the registry. If the person is accessing the registry on behalf of sellers, that person also must identify each of the sellers on whose behalf it is accessing the registry, must provide each seller’s unique account number for access to the national registry, and must certify, under penalty of law, that the sellers will be using the information gathered from the registry solely to comply with the provisions of this Rule or otherwise to prevent telephone calls to telephone numbers on the registry. [75 FR 48516, Aug. 10, 2010; 75 FR 51934, Aug. 24, 2010, as amended at 77 FR 51697, Aug. 27, 2012; 78 FR 53643, Aug. 30, 2013; 79 FR 51478, Aug. 29, 2014; 80 FR 77560, Dec. 14, 2016; 81 FR 59845, Aug. 31, 2016; 82 FR 39534, Aug. 21, 2017] kpayne on DSK54DXVN1OFR with $$_JOB § 310.9 Severability. The provisions of this Rule are separate and severable from one another. If any provision is stayed or determined to be invalid, it is the Commission’s intention that the remaining provisions shall continue in effect. 395 VerDate Sep<11>2014 14:29 Mar 27, 2018 Jkt 244054 PO 00000 Attachment A Fmt 8010 Sfmt 8010 Q:\16\16V1.TXT 31 Frm 00405 Appendix B (Educare Amended Complaint) 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 3 4 State of Ohio ex rel ,Attorney v enernl Dave Yost, 5 Plaintiffs, 6 7 8 9 10 No. 3:1 9-CV-196 FIRST AMENDED COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF V. 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, )I Tripletel, Inc., a Delawai:e corporation, 12 13 14 15 16 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, 17 18 19 20 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., 21 22 23 24 25 26 27 28 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 , 1 ,. Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 Charles Kharouf, individually and as an 2 3 owner, officer, member, and/ or manager of Educare Centre Services, Inc., and J>rolink Vision, S.R.L., 4 Defendants. Filed 12/03/19 Page 2 of 39 5 6 7 8 9 10 Plaintiffs, the Federal Trade Commission ("FTC") and the St.ate of Ohio, for their First Amended Complaint ("FA Complaint'') allege: 1. The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Conunission Act ("FTC Act''), 15 U.S.C. §§ 53(b), 57b, and the Telemarketing and Consumer 11 12 13 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 14 contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, the 15 appointment of a receiver, an asset freeze, and other equitable relief for Defendants' acts or 16 practices in '1iolation of Section S(a) of the FTC Act, 15 U.S.C. § 45(a), and in violation of 17 the FTC's Telemarketing Sales Rule ("TSR"), 16 C.F.R. Part 310. 18 19 20 2. The State of Ohio, by and through its Attorney General, Dave Yost, brings th.is action pursuant to the Telemarketing Act, 15 U.S.C. § 6103, the Ohio Consumer Sales 21 Practices Act ("CSPA"), 0.R.C. 1345.07, and the Ohio Telephone Solicitation Sales Act 22 ("TSSA''), O.R.C. 4719.01 et seq., in order to obtain temporary, preliminary, and permanent 23 injunctive relief, consumer damages, and other equitable relief from Defendants. 24 JURISDICT ION AND VENUE 25 26 27 3. This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 1345, and 1367. 28 2 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 4. Venue is proper in this disttict under 28 U.S.C. § 1391 (b)(2), (b)(3), and (c), and 15 U.S.C. § 53(b). SUMMARY OF THE CASE 3 4 5 6 Filed 12/03/19 Page 3 of 39 5. 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"), 7 8 Prolink Vision, S.R.L. ("Prolink"), 9896988 Canada, Inc. ("988") (collectively the "Educare 9 Defendants"), Globex Telecom, Inc., aod 9506276 Canada, Inc. ("276") have engaged in or 10 assisted and facilitated n deceptive telemarketing scheme that markets a credit card interest 11 rate ·reduction service ("CCIRR service") to consumers throughout the United States. 12 13 6. The Educare Defendants cold-call consumers, using live calls and prerecorded messages (commonly known as "robocalls"), promising that, in exchange for a 14 15 fee ranging from $798 to $1,192, they will obtain substantially lower interest rates on 16 consumeJ.-s' credit cards. To help lure consumers to purchase the CCIRR service, the 17 Educare Defendants promise a 100% "money-back guarantee".if tl1e Educare Defendants 18 fail to deliver the promised, substantially lower interest 1'ate or the consumers are otherwise 19 dissatisfied witl1 the service. 20 7. The Educate Defendants' promises are false or unsubstantiated. For the vast 21 22 majority of consumers who pay their fee, if not all, the Educare Defendants do not secure 23 the promised substantial rate reduction. In addition, the Educare Defendants routinely fail 24 to honor their money-back guarantee. 25 26 8. The Educate Defendants collect their service fee ftotn consumers through remotely created checks or remotely created payment ordei:s (collectively "RCPOs") drawn 27 against consumers' checking accounts. The TSR expressly prohibits such use of RCPOs in 28 connection with telemarketing sales. 3 ,. Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 9. Filed 12/03/19 Page 4 of 39 Madera Merchant Services, LLC, an El Paso, Texas-based company, and 2 associated companies ("Madera"), which run an unlawful payment processing scheme, 3 provide the Educate Defendants with the means to collect payments from consumers 4 through RCPOs. With Madera's suppod, the Educate Defendants have taken at least $11.5 5 million from consumers' bank accounts via RCPOs. The Educare Defendants have taken 6 money from consume.ts located in the Western District of Texas. In addition, Madera, on 7 8 behalf of the Educare Defendants, deposited money into and withdrew money from banks 9 located in the Western District of Texas that the Educare Defendants obtained from 10 consumers. 11 10. 12 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 13 Jul.18,2019). 14 15 16 17 18 19 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. 20 PLAINTIFFS 21 22 13. The FTC is an independent agency of the United States Government created 23 by statute. 15 U.S.C. §§ 41-58. The FfC enforces Section S(a) of the FfC Act, 15 U.S.C. 24 §·4S(a), which prohibits unfair ot deceptive acts 01· practices in or affecting commerce. 25 26 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 27 relief as may be appropriate in each case, including rescission or reformation of contracts, 28 4 ,. 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. 2 3 4 5 6 §§ 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 7 8 federal district court proceedings to enjoin telemarketing activities that violate the TSR, and 9 in each such case, to obtain damages, restitution, and other compensa~on on behalf of Ohio 10 residents. This Court has supplemental jurisdiction over Plaintiff State of Ohio's state law 11 claitns under 28 U.S.C. § 1367. 12 DEFENDANTS. 13 16. The Educare Defendants sell the CCIRR service at issue; Prolink operates a 14 15 call center that telemarkets the CCIRR service to consumers on behalf of Educate; 988 16 maintained Educare's customer relationship management system ("CRM") and billing 17 reconciliation; aod Globex Telecom, Inc. and 276 provided interconnected Voice over 18 Internet Protocol ("VoIP") communication services and facilities to Educare. 19 17. The four individual defendants are, or were during times relevant to the FA 20 Complaint, officers or tnaoagers of Educare, Prolink, 988, Globex Telecom, Inc., or 276, 21 22 23 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 24 25 26 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. 27 Vision, Care Value Services, and Card Value Services is a New Jersey corporation with its 28 registered address at 244 Sd• Avenue, Suite 11417, New York, NY 10001. 5 '. Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 19. 2 3 4 5 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 6 7 8 9 Prolink, to market the CCIRR service. 23. Educare has been the subject of more than 100 Better Business Bureau 10 ("BBB") consumer complaints and it and its dbas, including Credit Card Services and Care 11 Net, have received a "D +" or "F" rating f.rom the BBB serving the Metropolitan New York 12 area. Educare routinely fails to respond to consumer complaints to the BBB. 13 24. At all times material to this FA Complaint, acting alone or in concert with 14 15 others, Educate has advertised, marketed, distributed, or sold the products and services at 16 issue in this FA Complaint to consumers throughout the United States. E ducate transacts or 17 has transacted business in this district and throughout the United States. 18 19 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 20 owner of Tripletel. 21 22 23 24 25 26 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. 27 28 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 6 I • Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 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) 3 made unlawful telemarketing sales pitches regarding the CCIR.R service sold by Educare; (C) 4 collected U.S. consume.ts' personal information, such as a Social Security number, email 5 6 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 7 8 9 10 11 12 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. 13 ·31. Prolink's officers Mohammed Souheil and Charles Kharouf, and previous 14 15 officer Wissam Abedel Jalil, appear to operate Prolink out of Canada. 16 32. Madi has identified himself as the General Manager of Prolink. 17 33. At all times material to this FA Complaint, acting alone or in concert with 18 19 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 20 has transacted business in this district and throughout the United States. 21 22 34. 9896988 Canada Inc. is a Canadian corporation with a registered address of 23 7075 Place Robert-Joncas, Suite 225, St. Laurent, Quebec H4M 2Z2, Canada. Souheil is the 24 sole owner and president of 988. 25 26 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 27 withdrawn from consume1-s' checking accounts via unlawful RCPOs. 28 7 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 3 4 5 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 6 Telecom, Inc. 7 8 9 10 11 12 13 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 14 15 16 17 18 19 20 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 21 22 23 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 24 Agreement with Educate to provide Educare with "communication services and facilities." 25 Souheil executed the Agreement on behalf of Globex. Between February 2016 and June 26 2018, Educate transfer.red more than $1.6 million to Globex. 27 43. Globex transacts 01· has transacted business in this district and throughout 28 the United States. 8 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 2 Telecom, is a Canadian corporation. It lists its address as 225-7075 Place Robert-Joncas 3 Montreal, Quebec H4M2Z2 Canada. Souheil has been the president, treasurer, and secretary 4 of 276. 5 6 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 7 8 Communications Act of 1934, as amended. 46. 9 Since at least February 2016, 276 has received m?te than $3 million from 10 Globex. 276 transacts or has transacted business in this district and throughout the United 11 States. 12 The Individual Defendants 13 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, 14 15 16 which he appears to operate from Canada. Madi executed an application for Educare's 17 ,rirtual office at 244 51" Avenue, Suite 11417, New.York, NY 10001. Madi executed 18 agreements on Educare's behalf with Madel'a and Globex. He also has signatory authority 19 on multiple business checking accounts in the United States in the name of Educate and has 20 written thousands of dollars in checks against Educare's bank accounts that were cashed for 21 22 23 his own benefit. 49. Between August 2, 2016 and May 28, 2019, Madi transferred more than $1.1 24 million in Educare funds th.rough Sama Investments and Trading, Inc., a Dearborn, 25 Miclugan money transmitter, to an Altaif, Inc. account in the name of Mohammad Souheil. 26 50. Bet\veen May 17, 2016 and March 28, 2017, Madi transferred more than 27 $280,000 in E ducate funds through Sama Investments and Trading, Inc. to an Altaif, Inc. 28 account in the name of Wissam Abedel JaW. 9 ,. 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 2 Republic to, among other things, present reward certificates to several Prolink employees. 3 During his visit, Madi Also took photos with Prolink employees; one such photo is posted to 4 Prolink's Facebook page, identifying Madi as Prolink's "Genet-al Manager." 5 52. On or about May 16, 2018, Madi sent an email to Mo!1ammad Souheil from a 6 Prolink Vision email address in whicl1 Madi identified himself as the General Manager o f 7 8 9 Prolink. 53. At all times material to this Complaint, acting alone or in concert with others, 10 Madi has formulated, directed, controlled, had tl1e authority to control, or participated in the 11 acts and practices of Educue, including the acts Oi' practices set forth in this Complaint. 12 Madi transacts or has transacted business in this distt·ict and throughout the United States. 13 54. Mohammad Souheil, a/k/a Mohammed Souheil and Mike Souheil 14 15 16 ("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 17 president of 988, which, together, have received wire transfers from Educare totaling more 18 than $4 million. 19 56. Souheil was Educare's point of contact with Madera, Educare's E l Paso, 20 Texas-based payment processor. Souheil regularly communicated with Madera via email, 21 22 text message, and telephone concerning Educare's ptocessing settlements and consumers' 23 authorization for RCPOs. Souheil, using the email address 1nikesouheil@gmail.com, sent or 24 received more than 1200 emails to or from. Madera concerning Madera's processing of 25 Educare payments. 26 57. Souheil knew that Educare's charges were being processed through RCPOs. 58. Soheil knew that Educate was telemarketing CCIRR services. 27 28 10 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 3 4 5 59. Filed 12/03/19 Page 11 of 39 Souheil knew that Educate RCPOs had return rates of 10 to 20% and that financial institutions had shut down Madera accounts used to process Educare payments. 60. According to Madera's owner and president, Bruce C. Woods, during the four years that Madera processed payments for Educate, Souheil "always appeared to [him] to be in charge of Educare." 6 61. In an email dated August 22, 2016, Souheil asked Woods if Educare can have 7 8 two logins under the Educate merchant account ("educare 2") because "I have a 9 [telemarketing] room i (sic) am opening and wanted to separate the login and the reports for 10 each how can we get that done?" 11 12 13 62. In an email dated October 13, 2016, Souheil informed Madera that Educare's ''[v]olume will double in the next 60-75 days.. [W]e are aiming at [$]1M a month in processing on educare 2 this is what we are working hard to accomplish and it will be done i 14 15 16 17 18 19 (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." 20 64. On numerous occasions, Souheil received Educate funds via an account in 21 22 23 24 25 26 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 27 cardholders. 28 11 I I ·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 2 recehring numerous complaints from cardholders about FCS's service. Consumers 3 complained that FCS failed to delivet on its promise to lower their credit card interest rates 4 in exchange for a fee, and submitted credit card applications on behalf of consumers 5 without autho1ization. 6 (,7. At all times material to this Complaint, acting alone or in conceit with others, 7 8 Souheil has formulated, directed, controlled, bad the authority to control, or participated in 9 the acts and practices of Educare, Prolink, 988, Globex Telecom, Inc., and 276, including 10 the acts or practices set forth in this Complaint. Souheil, in connection with tlle matters 11 alleged herein, transacts or has transacted business in this distdct and throughout the United 12 States. 13 68. Wissam Abedel Jalil a/k/ a Sam Jalil ("Jalil") is a Canadian citizen who 14 15 16 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, 17 Suite 11417, New York, NY 10001. He also has signatory authority on a busin~ss checking 18 account in the i1ame of Tripletel Inc., a dba of Educate, which received approximately $2.3 19 million in deposits from Madera. 20 70. On numerous occasions co-defendant Madi used Sama Investments and 21 22 Trading, Inc., a Dearborn, Michigan money transmitter, to funnel Educare funds to Jalil via 23 an account in Souheil's name with a Canadian money transmitter, A.ltaif, Inc. Jalil received 24 more than $283,000 from Educate via the Altai£, Ioc., account in JaW's name. 25 26 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 27 services to American Express cardholders llnd genernted numerous complaints about 28 " deceptive acts and practices. 12 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 72. 2 3 4 5 6 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 7 8 district and throughout the United States. 9 74. Charles Kharouf is a Canadian citizen who resides in Montreal, Quebec. 10 75. Kharouf became an owner and officer of Prolink on or around January 10, 11 12 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 13 Devcostrat, a call center lead generator. Before Kharouf acquired ownership in Prolinlc, 14 15 Devcostrat received mo.re than $41,000 in wire transfers from Educate. 16 77. Kharouf has received more than $28,000 in wire transfers from Educate. 17 78. At all times material to th.is Con1plaint, acting alone or in concert with others, 18 19 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. 20 Kl1arouf, in connection with the matters alleged herein, transacts or has transacted business 21 22 in this district and tbroughout the United States. COMMON ENTERPRISE 23 24 25 26 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 27 operated the CRM and coordinated h:iving funds withdrawn fron1 consumets' accounts via 28 unlawful RCPOs. Souheil is the majority owner of Prolink, the sole owner of 988, and the 13 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 3 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. 4 5 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, 6 business functions, and employees; and that marketed and sold common services, shared 7 8 revenues, and corningled funds. 81. 9 Because Educa1·e, Prolinlc; 988, and Tripletel operated as a common 10 enterprise, each of the entities is jointly and severally liable for the acts and practices alleged 11 in this FA Complaint. At all times material to this Complaint, Souheil, Kharouf, Madi and 12 Jalil formulated, directed, controlled, had the authority to control, or participated in the acts 13 and practices of Educate, Prolink, 988, and Tripletel which constitute the Educate 14 15 Defendants common enterprise. 82. 16 Defendants Globex Telecom, Inc. and 276 (collectively, "the Globex 17 Defendants") also have operated as a common enterprise while engaging in the unlawful acts 18 and practice alleged in trus FA Complaint. They have conducted business practices 19 desctibed herein through intei:related companies, which have a common business purpose, 20 business functions, and officers; have used the same name, shared revenues, and com.ingled 21 22 23 funds. 83. Because the Globex Defendants operated as a common enterprise, each is 24 jointly and severally liable for the acts and practices alleged against them in this FA 25 Complaint At all times material to this Complaint, Souheil formulated, directed, controlled, 26 had the authority to control, or participated in the acts and practices of the Globex 27 Defendants. 28 14 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 15 of 39 1 COMMERCE 2 3 4 5 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. 6 REMOTELY CREATED PAYMENT ORDERS 7 AND REMOTELY CREATED CHECKS 8 9 85. An RCPO is a check or order of payment that the payee (typically a 10 merchant or its agent) creates electronically, with software, using the payor's (typically a 11 consumer) bank account information. . 12 86. Unlike with a conventional check, the payor does not sign the RCPO. 13 Instead, the RCPO usually bears a statement indicating that the account holder (the account 14 15 16 17 18 19 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 20 remote deposit capture-a system that allows a depositor to scan checks remotely and 21 22 23 transmit the check images to a bank for deposit. 88. RCPOs are generally subject to less oversight and monitoring than more 24 prevnlent med1ods of consumer payments, such as Automated Clearinghouse ("ACH") and 25 debit and credit card transactions. 26 89. Payments cleared through the ACH network are subject to oversight by 27 NACH.A - The Electronic Payments Association (''NACHA"), a self-regulatory trade 28 association that enforces a system of rules, monitoring, and penalties for noncompliance. 15 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 16 of 39 NACHA monito1·s the levels at which ACH debits are returned (or rejected) by consumers 2 or consumers' banks, among otl1et t~sons, because high rates of returned transactions can 3 be indicative of unlawful practices by merchants. 4 5 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 6 for noncompliance. These include heightened monitoring requirements for merchants 7 8 designated as high risk, such as telemarketers. 91. 9 The card networks require network participants - including merchants, 10 payment processors and merchant banks - to monitor transactions for unusual activity 11 indicative of fraud or deception. One prominent indicator is a high chargeback rate. 12 Chargebacks occur when customers contact their credit card issuing bank to dispute a charge 13 appea1i.ng on their credit card account statement. Merchants with high chargeback rates may 14 15 16 17 18 19 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 20 using RCPOs in: telemarketing sales. The FTC added this prohibition to the TSR because, 21 22 23 after an extensive notice and comment process, it found little record of legitimate telemarketing business using RCPOs. DEFENDANTS' UNLAWFUL BUSINESS PRACTICES 24 25 26 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 27 unsubstantiated claims. The Educare Defendants promise to reduce significantly the interest 28 rate on consumers' credit cards, and further promise a 100% money back guarantee if the 16 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 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. 3 4 5 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. 6 , Defendants' D eceptive Telemarketing Campaign 7 96. 8 Since at least Febtuary 2016, the Educare Defendants have engaged in a plan, 9 program, or campaign to advertise, market, promote, offer for sale, or sell a CCIRR service 10 tluough interstate telephone calls to consumers throughout the United States. 11 12 97. In numerous instances, the Educare Defendants have initiated, ot directed others, including telemarketers with ~rolinlc, to initiate unsolicited telemarketing calls that 13 offer consumers an opportunity to lower their credit card interest rates. 14 98. 15 In numerous instances, the Educare Defendants' telemarketing calls deliver 16 p~erecorded voice messages. These messages offer consumers the opportunity to secure 17 credit card interest rates that are substantially lower from those consumers were paying, and 18 instruct consumers to press a button on the telephone keypad to hear more about the 19 service. 20 99. Consumers who press a button on their telephone lceypad to hear more 21 22 about the service are connected to a live telemarketer who continues the deceptive sales 23 pitch, as described below. Man}', if not all, of these telemarketers are associated with 24 Prolink's call center. 25 100. 26 In numerous instances, the Educate Defendants' telemarketers fail to disclose to consumers, truthfully, promptly, and in a clear and conspicuous manner, the 27 identity of the seller of the CCIRR service. Instead, the Educate Defendants' telemarketers 28 routinely identify themselves as representatives of "Credit Card Services," "Credit Card 17 C'ase 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 18 of 39 Financial Services," or similar Educate dbas that sound like the name of a bank or credit 2 3 card compan}', 101. In many instances, the Educare Defendants' telemarketers know the last four 4 digits of at least one of the consumer's credit cards. That fact often leads consumers to 5 assume that they are speaking with a representative ot agent of their bank oi: credit card 6 company. 7 8 9 10 11 12 102. 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 13 to credit cards with such substantiali}' lower interest rates. 14 15 104. For example, one telemarketer placed a consumer oo. hold, and returned a 16 few minutes later stating that the Educate Defendants had permanent!}' lowered tl1e interest 17 rate 011 one of consumer's credit cards to 3%, and would similarly lower the interest rates on 18 the consumer's otl1er credit cards if tl1e consumer signed an online agreement. 19 20 105. 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 21 22 23 24 25 26 27 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 28 her credit card debt faster. 18 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 3 4 5 6 107. 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. 7 8 9 109. In numerous instances, the Educate Defendants' telemarketers have told consumers that the significant savings the CCIRR service provides to the consumer would 10 offset the fee payment. 11 110. 12 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 13 recorded. 14 15 111. The Educate Defendants' telemarketers often tell consumers that the)' will 16 recehre a w1-itten agreement describing the CCIRR service in the mail. In numerous, if not 17 all,.instances, the consumers do not receive the promised agreement in the mail. 18 19 112. In numerous instances, the Educare Defendants' telemarketers tell consumers that they will receive a text or email message asking them to confirm that they 20 want to purchase the CCIRR service. For example, one consumer i-eceived the following 21 22 23 24 25 26 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. 27 114. Consumers ,~ho respond to the confirmation-request text or email message 28 typic_ally i-eceive a subsequent text or email message confirming the fee authorization. For t9 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 20 of 39 example, one consumer received the following text message: "[Consumer's name]: You have 1 2 approved 5 payment of $159.60 for a total of $798 to be debited from your Account ~X.'X 3 Cst Srv: 866-456-1676" 4 5 115. In numerous instances, the Educare Defendants' telemarketers and customer service agents have refused to honor requests to cancel set-vice from consumers who have 6 become concerned with or suspicious of the CCIRR set-vice, including requests made on the 7 8 9 same day the service was purchased. 116. For example, in 2018, a telemarketer who identified himself as William Silva 10 and a "financial advisor" for "Card Services," refused a consumer's cancellation request after 11 the consumer agreed to pay for the CCIRR service but then attempted to back out of the 12 deal up011 realizing during the telephone call that Mr. Silva did not represent his credit card 13 company. 14 15 117. Another Educare Defendants telemarketer told a consumer who requested to 16 cancel the CCIRR service on the same day of the purchase that it was too late because the 17 consumer had already agreed to the charges. 18 19 118. The Educal'e Defendants have also threatened consumers who sought to cancel the CCJRR service with sending the consumers' accounts to collections. 20 119. For example, a telemarketer who identified himself as Jacob Scott with Care 21 22 Value Sel'vices told one consume!' who requested cancellation of the CCIRR service that the 23 consumer could not cancel, and that the Educal'e Defendants were still going to debit the 24 fees from consumer>s checking account, and if the consumer did not pay, the Educate 25 Defendants would tack on additional fees and sue him in court. 26 120. In numerous instances, the Educate Defendants have drawn, or caused to be 27 drawn, payments from accounts of consumers who requested to cancel the CCIRR service 28 and instructed the Educare Defendants not to draw funds from their accounts. 20 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 2 months from the checking account of a consumer who told the Educate Defendants' 3 telemarketers aod customer service agents not to charge his account and made repeated 4 requests to cancel the CCIRR service. 5 Unlawful RCPOs Drawn Against Consumets' Checking Accounts 6 122. To collect the fee for the CCIRR service, the Educate Defendants, with the 7 8 help of payment processor Madera, use personal infortnation they solicit from consumers, 9 including bank account and routing number, to cause the creation of RCPOs drawn against 10 consumers' bank accounts. 11 12 123. Many such RCPOs are returned by the consumers' banks for reasons such as "stop payment," "forget}':' "closed actount," and "unable to locate." 13 124. During the relevant period, several bank accounts opened by Madera under 14 15 various dbas of Educate had return rates of 20% or more. 125. 16 Since January 2016, Madera has transferred to Educare at least $11.5 million 17 in consumer funds collected through RCPOs. The Educare Defendants and Madera have 18 collected more than $7 million of that amount from consumers after June 13, 2016, the date 19 on which the TSR started banning the use of RCPOs in connection with any telemarketing 20 sales. 21 22 23 Defendants Fail to Deliver the Promised Substantial Rate-Reduction 126. In some instances, after the consumers authorized the fee payment, the 24 Educate Defendants' telemarketets initiate three-way telephone calls with the consumers and 25 the customer service departments of the banks that issued the credit cards to the consumer. 26 During these three-way calls, the Educate Defendants' telemarketers request, 01' prompt the 27 consumers to request, that the bank reduce the interest rate on the consumets' credit cards. 28 21 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 3 4 5 127. 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. 6 In numerous instances, the Educate Defendants use the information they 129. 7 8 obtain from consumers to apply on behalf of consumers, or advise the consumer to apply, 9 for new credit cards with low introductory 1-ates (commonly known as "teaser rates") and 10 transfer their existing credit card balances to those new cards. 11 12 130. 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 13 consumer actually received a new credit card with a 0% APR for 9 months and over 20% 14 15 16 17 18 19 APR 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 20 Credit Reporting stating that two credit card applications were submitted using hjs personal 21 22 information. Soon thereafter, the consumer L'eceived a telephone call from a representative 23 of Chase Bank seeking to verify his application for a credit card, which the consumer had ·110 24 prior knowledge of and did not authorize. 25 26 133. The Educare Defendants' balance transfer tactic does not typically deliver the promised substantial rate reduction. Consumers often cannot qualify for the new credit 27 28 cards, and in any event, the reduced rates are only temporary and commonly followed by double-digit rates. 22 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 134. 2 3 6 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, 4 5 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 7 8 substantially lower credit card interest rate, or if tl1e consumer is othenvise dissatisfied witl1 9 the CCIRR service. 10 136. 11 12 13 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 14 15 16 Defendants' telemarketer provided is no longer in service. 138. Consumers who have been able to reach a representative of the Educare 17 Defendants by telephone have reported being strung along with no refund or even partial 18 refund issued. 19 20 139. 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 21 22 who were difficult to understand, evasive, condescending, transferred her to a "manager" 23 that never answered tl1e phone, or misrepresented that Educare had delivered the promised 24 interest mte reduction even though it had not done so. 25 26 140. 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. 27 28 23 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 P~ge 24 of 39 The Ed11ca1·e Defendants' Abusive T elemarketing P ractices 2 141. In numerous instances, the Educate Defendants, acting directly or through 3 one or m oJ:e intermediaries, have initiated telemarketing calls to consumers throughout the 4 United States that delivered a prerecorded message promoting the CCIRR service, without 5 first having obtained the consumers signed express written agreement to receive such calls 6 by ot on behalf o f the E ducate Defendants. 7 8 142. In marketing the CCIR.R setvice, in numerou s instances, the Educate 9 Defendants, acting directly or through one or more intermediaries, have called telephone IO numbers listed in various area codes throughout the United States, including telephone 11 numbers listed on the National Do Not Call Registry maintained by the FTC, with out the 12 Educare D efendants' fu-st paying the annual fee for access to the telephone numbers within 13 such area codes. 14 15 143. In numerous instances, the Educate Defendants have received fees they 16 caused to be drawn from conswn ets' bank accounts during or immediately aftet the 17 telemarketing call offering the CCIR.R service, but before th e Educate Defendants had 18 undertaken any efforts to reduce the consumers' credit card interest rates. This is illegal 19 under the TSR. 20 144. Io numerous instances, the Educate Defendants, acting directly or ~ttough 21 22 23 24 25 26 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 27 28 States via interconnected VoIP communication services and facilities. 24 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 146. 2 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 3 in its telemarketing of CCIRR set-vices: Souheil and the Globex Defendants knew or 4 consciously avoiding knowing that, among other things, Educate: 5 A. 6 Misrepresented that consumet'S who purchase the CCIRR service (1) would have their credit card interest rates reduced substantially; or 7 (2) would be entitled to a full refund if the Educare Defendants 8 could not obtain a lower interest rate or if the consumer was not 9 completely satisfied with the CCIRR service; 10 11 B. 12 Created or caused to be created, directly or inditectly, a remotely created payment order as payment for goods or se1vices offered or 13 sold through telemarketing, duci.ug the time periods set forth in the 14 FA Complaint; 15 16 C. Charged or received a fee in advance of providing debt relief service; 17 D. Initiated outbound telephone calls that delivered unlawful; 18 prerecorded messages; or 19 E. 20 Failed to disclose the identity of the seller of the CCIRR service ttuthfully, promptly, and in a clear and conspicuous manner to the 21 person receiving the call. 22 23 147. Between January 2016 and November 2018, Educare caused more than $9.5 24 million in unreimbursed consumer harm to consumers in the United States. The Globex 25 Defendants are jointly and severally liable with the Educate Defendants for that harm, which 26 was caused by their provisioµ of communication services and facilities to the Educare. 27 28 25 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) Filed 12/03/19 Page 26 of 39 Ohio>s Telephone Solicitor's Registration Requirement 2 148. Ohio's Telephone Solicitation Sales Act, O.R.C. 4719.01 el seq., genei-ally 3 requires telephone solicitors that make telephone solicitations to individuals in Ohio to 4 register with and file a copy of a surety bond with the Ohio Attorney General. 5 6 149. Defendants Educate and Prolink have been solicitors that make telephone solicitations to individuals in Ohio. Nevertheless, they have neither registered as telephone 7 8 9 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 IO have reason to believe that the Educare Defendants and the Globex Defendants are violating 11 or are about to violate laws enforced by the Commission and the Ohio Attorney General. 12 13 VIOLATIONS OF THE FTC ACT 151. Section S(a) of the FfC Act, 15 U.S.C. § 45(a), prohibits "unfair or deceptive 14 15 16 17 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). 18 COUNT ONE (EDUCARE DEFENDANTS) 19 False or Unsubstantiated Credit Card Interest Rate Reduction and Refund Claims 20 153. In numerous iost;nces, in connection with the advertising, marketing, 21 22 23 24 promotion, offering for sale, or sale of a debt relief service, the Educate Defendants have tepresented, directly or indirectly, expressly or by implication, that: A. 25 26 Consumers who purchase the CCIRR service would have their credit card interest rates reduced substantially; and/or B. Consumers who purchase the CCIRR service would be entitled to a 27 full refund if Defendants could not obtain a lower interest rate or if 28 the consumer was not completdy satisfied with the CCIIUl service. 26 Case 3:19-cv-00196-KC Document 81 *SEALED* (Ex Parte) 1 2 154. 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: A. 3 4 Consumers who purchase the CCIRR service do not have their credit card interest rates reduced substantially; and/ or 5 B. Consumers who purchase the CCIRR service and do not obtain a 6 lower interest rate 01" are not completely satisfied with the CCIRR 7 service do not provided a full refund. 8 9 15~. Therefore, the Educare Defendants' representations as set forth in Paragraph 10 153 of this Complaint are false or misleading and constitute a deceptive act or practice .irt 11 violation of Section S(a) of the FTC Act, 15 U.S.C. § 45(a). 12 13 THE TELEMARKETJNG SALES RULE l 56. In 1994, Congress directed the FTC to prescribe rules prohibiting abusive 14 15 and deceptive telemarketing acts or practices pursuant to the Telem.'lrketing Act, 15 U.S.C. §§ 16 6101-6108. The FTC adopted the original TSR 1n 1995, extensively amended it in 2003, and 17 amended certain sections thereafter. 18 . 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" 20 is any person who, in connection with a telemarketing transaction, provides, offers to 21 22 provide, or arranges for others to provide goods or services to a customer in exchange for 23 consideration. 16 C.F.R. § 310.2(dd). A "telemadceter" means any person who, ii1 24 connection with telemarketing, initiates or receives tele [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Aftc%3Ac046dfa0691ada08. Public record. Not legal advice.