FTC targets group that sends out millions of robocalls a day

FTC and 10 state attorneys general settle with vacation services group that made massive robocall across the country.

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.

+ More on Network World: FTC: Imposter scams bully into top 3 consumer complaints spot +

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.

+ More on Network World: Wireless cyber security in your car stinks +

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.

Join the CSO newsletter!

Error: Please check your email address.

Tags LineFederal Trade CommissionsecurityftcscamsLAN & WAN

More about Federal Trade CommissionFredFTCInc.TSR

Show Comments

Featured Whitepapers

Editor's Recommendations

Solution Centres

Stories by Michael Cooney

Latest Videos

  • 150x50

    CSO Webinar: Will your data protection strategy be enough when disaster strikes?

    Speakers: - Paul O’Connor, Engagement leader - Performance Audit Group, Victorian Auditor-General’s Office (VAGO) - Nigel Phair, Managing Director, Centre for Internet Safety - Joshua Stenhouse, Technical Evangelist, Zerto - Anthony Caruana, CSO MC & Moderator

    Play Video

  • 150x50

    CSO Webinar: The Human Factor - Your people are your biggest security weakness

    ​Speakers: David Lacey, Researcher and former CISO Royal Mail David Turner - Global Risk Management Expert Mark Guntrip - Group Manager, Email Protection, Proofpoint

    Play Video

  • 150x50

    CSO Webinar: Current ransomware defences are failing – but machine learning can drive a more proactive solution

    Speakers • Ty Miller, Director, Threat Intelligence • Mark Gregory, Leader, Network Engineering Research Group, RMIT • Jeff Lanza, Retired FBI Agent (USA) • Andy Solterbeck, VP Asia Pacific, Cylance • David Braue, CSO MC/Moderator What to expect: ​Hear from industry experts on the local and global ransomware threat landscape. Explore a new approach to dealing with ransomware using machine-learning techniques and by thinking about the problem in a fundamentally different way. Apply techniques for gathering insight into ransomware behaviour and find out what elements must go into a truly effective ransomware defence. Get a first-hand look at how ransomware actually works in practice, and how machine-learning techniques can pick up on its activities long before your employees do.

    Play Video

  • 150x50

    CSO Webinar: Get real about metadata to avoid a false sense of security

    Speakers: • Anthony Caruana – CSO MC and moderator • Ian Farquhar, Worldwide Virtual Security Team Lead, Gigamon • John Lindsay, Former CTO, iiNet • Skeeve Stevens, Futurist, Future Sumo • David Vaile - Vice chair of APF, Co-Convenor of the Cyberspace Law And Policy Community, UNSW Law Faculty This webinar covers: - A 101 on metadata - what it is and how to use it - Insight into a typical attack, what happens and what we would find when looking into the metadata - How to collect metadata, use this to detect attacks and get greater insight into how you can use this to protect your organisation - Learn how much raw data and metadata to retain and how long for - Get a reality check on how you're using your metadata and if this is enough to secure your organisation

    Play Video

  • 150x50

    CSO Webinar: How banking trojans work and how you can stop them

    CSO Webinar: How banking trojans work and how you can stop them Featuring: • John Baird, Director of Global Technology Production, Deutsche Bank • Samantha Macleod, GM Cyber Security, ME Bank • Sherrod DeGrippo, Director of Emerging Threats, Proofpoint (USA)

    Play Video

More videos

Blog Posts

Market Place