FTC targets group that sends out millions of robocalls a day

Given the amount of time the FTC and others have put into curing the robocall problem, it is disheartening to hear that a group of companies for almost a year have been making billions of illegal robocalls.

The Federal Trade Commission and 10 state attorneys general today said they have settled charges against a Florida-based cruise line company and seven other companies that averaged 12 million to 15 million illegal sales calls a day between October 2011 through July 2012, according to the joint complaint filed by the FTC and the states.

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Consumers who answered these calls typically heard a pre-recorded message supposedly from "John from Political Opinions of America," who told them they had been "carefully selected" to participate in a 30-second research survey, after which they could "press one" to receive a two-day cruise to the Bahamas. Once consumers completed the survey and pressed one for their cruise were connected to a live telemarketer working on behalf of Caribbean Cruise Line, Inc. (CCL), to market its cruise vacation packages, the FTC said.

The rat in the ointment here is that while the FTC's do-not-call and robocall rules do not prohibit political survey robocalls, the defendants' robocalls violated federal law because they incorporated a sales pitch for a cruise to the Bahamas. The robocalls generated millions of dollars for the cruise line, the FTC said.

However as is typical in these cases, while the settlement imposes a civil penalty of $7.73 million against CCL, it will be partially suspended after CCL pays only $500,000. Other companies involved such as Linked Service Solutions got a $5 million civil penalty but will only be required to pay $25,000.

Specifically, the FTC complaint charges CCL with violating the agency's Telemarketing Sales Rule (TSR) by using robocalls to sell cruise vacations. The complaint also alleges that two other companies, Linked Service Solutions, LLC and Economic Strategy LLC, violated the TSR by placing the robocalls that generated leads for CCL.

The FTC complaint also charges a group of five interrelated companies, and their owner, Fred Accuardi, with assisting and facilitating the illegal cruise calls. The complaint alleges that these defendants provided robocallers with hundreds of telephone numbers to use when making calls, made it possible for robocallers to choose and change the names that would appear on consumers' caller ID devices, and hid the robocallers' identities from authorities.

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In addition, the Accuardi defendants helped fund the robocallers by sharing fees generated by accessing caller ID names. The five companies charged with assisting and facilitating the robocall violations are: Telephone Management Corporation, T M Caller ID, LLC, Pacific Telecom Communications Group, International Telephone Corporation and International Telephone, LLC.

The FTC and attorneys general of Colorado, Florida, Indiana, Kansas, Mississippi, Missouri, North Carolina, Ohio, Tennessee, and Washington brought the case.

The robocall scourge continues to confound. The FTC has held two crowdsourcing events to come up with new technologies that can beat back the robocallers, the most recent was last summer's DEFCON where the FTC challenge was called, "Zapping Rachel," a reference to the "Rachel from Cardholder Services" robocall scam the agency took out in 2012. The FTC's Robocall Challenge in 2012 yielded nearly 800 new ideas on how to stop robocallers. One of the winners of that challenge, Nomorobo, offers a free service to prevent robocalls.

According to the FTC, the growth in robocalls has been enabled by technological changes that have drastically decreased the cost of making phone calls. Robocall companies use technical tricks to lower their costs even more. For example, some experts believe that the robo-voices that you hear on their calls are chosen, in part, because they are especially compressible--they can be transmitted at low data rates and still sound good.   This lets the robocallers cram more simultaneous calls through the same Internet connection.

"Another interesting tech question is how to catch the robocallers and their confederates.   They have long since figured out how to evade or misuse Caller ID, a system that was never really designed to provide any kind of strong proof of the caller's identity. Caller ID works well when the participants in routing a call are cooperating nicely, but it relies on callers or their technological proxies to send accurate identifying information -- which is no longer universal now that the phone system is no longer run by a few well-established companies but is open to connections from almost anybody. Again, the thriving, diverse ecosystem of companies providing phone services is a good thing on the whole, having unleashed innovation and lowered prices, but it does have a dark side," the FTC stated.