Court shuts source of 370 million robocalls
At the FTC's request, a federal judge in Chicago today shut down operations of SBN Peripherals Inc., based near Los Angeles, which allegedly made more than 370 million calls to U.S. consumers in the past year, prompting tens of thousands of complaints.
Illegal telemarketing may be largely an annoyance to most consumers. Chances are, you know enough to hang up when a recorded voice says it's "Stacey at Account Holder Services" with "important information about your credit card," or someone who claims knowledge that your car warranty is about to expire.
But it's important to remember that these calls are basically a gateway to larger scams that are aggressively victimizing some people - otherwise the companies behind it wouldn't invest so heavily in the technology. And the latest case by the Federal Trade Commission is another reminder of how high-tech and sophisticated these operations have become.
FTC attorneys in Chicago got a federal court order today to shut down a company, SBN Peripherals, Inc., based near Los Angeles, that allegedly made more than 370 million calls to consumers nationwide in the last year alone. One phone service provider told the FTC that on a single day in April 2009, SBN sent 2.4 million calls to consumers - more than 27 calls per second. (To see the FTC's announcement and legal documents in the case, click here.)
The move against SBN was made possible because the FTC last year tightened its rules against "robocalls," the prerecorded phone messages that enable a high-tech telemarketer to bait thousands of lines simultaneously, and then try to reel in the small percentage of consumers who bite.
The FTC's announcement explained how it worked:
To make it difficult for consumers to identify the caller, the FTC alleges that SBN's robocalls often transmitted caller ID information vaguely identifying the caller as "SALES DEPT" and displaying telephone numbers registered to an offshore company it controlled called Asia Pacific Telecom. Asia Pacific, a foreign shell company for SBN, made many of the calls and lists its addresses in locations as disparate as the Northern Mariana Islands, Hong Kong, and the Netherlands, the FTC's complaint alleges.
According to the FTC, three of Asia Pacific's telemarketing numbers accounted for more than 25,000 consumer complaints to the agency in the past year. Two of those telephone numbers – 301-882-9986 and 757-990-8981 – generated more complaints to the FTC during the past year than any other robocall number. Many of the calls were made to cell phones, sticking consumers with additional charges.
The operation allegedly used a technology known as "voice broadcasting" to deliver its fraudulent pitches. The FTC charges that the recordings falsely claimed that the caller had urgent information about the consumer's auto warranty or credit card interest rate. Consumers who pressed "1" for more information were transferred to live telemarketers at a variety of different locations, who used fraudulent practices to sell inferior extended auto service contracts or worthless debt-reduction services.
The companies behind these scams are taking more and more flagrant risks, such as calling wireless numbers (which is itself illegal for telemarketers). The FTC's tighter rules on robocalls, imposed last September, are part of the cat-and-mouse enforcement effort.
The FTC's Midwest regional director, C. Steven Baker, said marketers "need to understand that blasting consumers with 'robocall' pitches is no longer legal. Unless you have someone's consent up-front and in writing to receive a robocall, just don't do it. The rules could not be simpler than that, and we will go after telemarketers who ignore them."
The FTC said the judge's order stops SBN's calls, temporarily freezes its assets, and names a receiver to take control of its business.
To register a number on the national Do Not Call list, click here.