A telemarketing operation that gathered phone numbers from the National Do Not Call Registry and “bombarded” people with about 2.6 billion calls reached a settlement with the Federal Trade Commission to cease operation, the commission announced last week.
California-based SBN Peripherals, which did business as Asia Pacific Telecom Inc., used recorded messages, including notorious telemarketers “Rachel at Cardholder Services” and “Stacy at Account-holder Services,” to sell a number of products, including “inferior” car-repair contracts and “worthless debt-reduction services,” the FTC said.
Caller ID information would often display “SALES DEPT” and a telephone number registered to an offshore company.
The settlement, if approved by a district court in Illinois, would ban Repo B.V., SBN Peripherals Inc. doing business as SBN Dials, Johan Hendrik Smit Duyzentkunst and Janneke Bakker-Smit Duyzentkunst from telemarketing. The defendants must also “properly dispose” of customers’ personal information, the FTC said.
A $5.3 million judgment will be suspended if the defendants turn over about $3 million in assets, including $1 million in a Hong Kong bank account, their interest in an office building on the Pacific island of Saipan and seven parcels of undeveloped land in Los Angeles County and Phoenix, a $375,000 lien on a house, three cars and a recreational vehicle.
Each defendant must provide a sworn compliance report every year for 10 years that provides his or her contact information and describes all the businesses in which he or she is involved. For 20 years, each defendant must maintain detailed records of the activities of each business he or she is involved with, including customer files, complaints, refund requests, advertisements and personnel records.
Some notable excerpts from government documents submitted in the case:
“. . . during 2009, a single telephone number used by defendants in connection with their telemarketing activities (301-882-9986) generated nearly 14,000 Do Not Call complaints to the FTC, more than any other telephone number during this period.”
“Disposal [of customers’ personal information] shall be by means that protect against unauthorized access to the customer information, such as by burning, pulverizing, or shredding any papers, and by erasing or destroying any electronic media, to ensure that the customer information cannot practicably be read or reconstructed.”
“Many of the illegal practices involved here were readily discernible. Minimal due diligence by Defendants would have revealed that several of their clients previously had been sued by the FTC or state attorneys general for fraud, or had “F” ratings with the BBB.”
“. . . just one of Defendants’ auto warranty clients – MCS – took in over $6 million last year from consumers.”
The three cars to be relinquished:
2003 Chevrolet Corvette
2005 BMW X5
2004 Dodge Durango
Other tidbits from the government’s case:
The defendants’ “dialing service” had a “total capacity of several million call attempts per hour.”
The defendants leased space in a telecom facility in L.A.
In an email Mr. Duyzentkunst advertised that he “generat[ed] 13,000-15,000 p1’s [‘press 1s’] a day” (“Press 1” as in press 1 for further information).
Finally, an anecdote:
I alerted a California man to the settlement. The man had complained to Whistleblower about Rachel from Cardholder Services. He responded: “. . .thank you so much for that upbeat link.........however, I just got another call from them yesterday.....yes, Card Services. Sigh.”
UPDATE: The FTC just released an announcement of another robocall-telemarketing shutdown. This one involves the highest civil penalty against an individual defendant in FTC history: $20 millions dollars. Click here to read that settlement.
The defendants in that case, Cash Grant Institute, Paul Navestad and Christine Maspakorn, made eight million robocalls, including 2.7 million calls to phone numbers on the National Do Not Call Registry and falsely told customers that, for a fee, they could procure cash grants for the customers. The grants did not exist.