Another Joke Fine Shows US Authorities Do Not Take Illegal Telemarketing Calls Seriously

Last week I wrote about Operation New Press Release Operation Stop Scam Calls, a limp attempt by the US Federal Trade Commission (FTC) and other authorities to fool the American public into believing laws that prohibit illegal telemarketing calls are being properly enforced. Their ‘new’ operation consisted merely of reiterating past promises coupled with five examples of businesses being lined up for punishment. However, court filings show the actual punishment handed out in one of those five cases is nothing like the figure included in the FTC’s media announcement.

Per the FTC’s press release, marketing business Solar Xchange LLC and its owner, Mark Getts, were seemingly going to be clobbered with penalties worth millions of dollars.

Under a proposed order settling the charges, Solar Xchange and Getts will be prohibited from: misrepresenting that they are affiliated with any utility or government agency; making unsubstantiated claims regarding the cost of installing solar panels; and engaging in abusive telemarketing practices. It also imposes a partially suspended civil penalty of $13.8 million.

The reality is that Solar Xchange and Getts are only expected to pay USD125,000 in total. This will be split into two equal payments to the federal authorities and to the State of Arizona; here are the relevant clauses from the actual settlement:

B. Defendants are ordered to pay to Plaintiff United States of America, by making payment to the Treasurer of the United States, Sixty-Two Thousand Five Hundred Dollars ($62,500.00)…

C. Defendants are ordered to pay Plaintiff State of Arizona Sixty-Two Thousand Five Hundred Dollars ($62,500.00)…

Does it seem right that an effective fine of just USD125,000 is an appropriate punishment for ‘tens of millions’ of illegal calls to Americans on the national Do Not Call registry?

…the FTC charged that New Jersey-based Vision Solar LLC; Solar Xchange LLC, which also did business as Energy Exchange; and its owner Mark Getts, violated the FTC Act, the TSR [Telemarketing Sales Rule], and Arizona’s Consumer Fraud Act and Telephone Solicitation Act by making unlawful telemarketing calls on behalf of Vision Solar, a company that sells solar panels. The Commission and Arizona say that Energy Exchange placed tens of millions of calls to consumers whose numbers are listed on the DNC Registry — thousands of whom reported receiving dozens of calls.

Vision Solar has refused to settle with the FTC. Meanwhile, the attorneys representing Solar Xchange said they only agreed a ‘nominal’ settlement to save themselves the legal cost of continuing to fight their case. reports:

Isaac Gabriel, an attorney for the defendants, said in a statement last week that “Solar Xchange and Mr. Getts deny any liability in this matter or that it violated any aspect of federal or state law.”

“Solar Xchange was faced with protracted litigation and extensive legal fees to defend itself against a government agency with unlimited resources and accepted a nominal settlement in lieu of having to spend millions of dollars defending itself,” Gabriel said.

The FTC says Solar Xchange and its owner were responsible for tens of millions of illegal calls. If they made only 10 million illegal calls then a USD125,000 penalty effectively increases the cost of each call by just 1.25 cents each. This cannot be a deterrent to businesses which willfully break the law. One solar panel review site estimates that the typical solar panel installation of the type sold by Solar Xchange costs around USD18,000. That is why businesses like these ruthlessly hammer consumers with repeated unwanted calls. The FTC said at least 12,000 people received 100 calls or more from Solar Xchange. That means the FTC has negotiated a settlement where the distress caused by harassing the same person 100 times in a row, day after day over the period of a few months, merits the measly penalty of $1.25. Victims cannot feel that justice has been served or their rights have been respected.

It is time to stop the charade where US authorities boast about sky-high penalties to credulous news organizations that uncritically repeat them. Systematically misleading the public is not detering habitual spammers. Illegal telemarketers are ignoring the fantasies concocted for the public because they can see how trivial the real punishments are. I fear that neither US federal nor state agencies, nor the politicians that oversee them, nor the journalists that are supposed to hold them all to account, have any interest in the serious reforms required to begin genuinely punishing abusive telemarketers.

Eric Priezkalns
Eric Priezkalns
Eric is the Editor of Commsrisk. Look here for more about the history of Commsrisk and the role played by Eric.

Eric is also the Chief Executive of the Risk & Assurance Group (RAG), a global association of professionals working in risk management and business assurance for communications providers.

Previously Eric was Director of Risk Management for Qatar Telecom and he has worked with Cable & Wireless, T‑Mobile, Sky, Worldcom and other telcos. He was lead author of Revenue Assurance: Expert Opinions for Communications Providers, published by CRC Press. He is a qualified chartered accountant, with degrees in information systems, and in mathematics and philosophy.