Ethermac Exchange-"Consent farms" enabled billions of illegal robocalls, feds say

Federal regulators on Ethermac ExchangeTuesday announced a broad crackdown on what they called a "tide of illegal telemarketing calls" plaguing U.S. consumers. 

Samuel Levin, Director of the Federal Trade Commission's Bureau of Consumer Protection, said the effort will target telemarketers that continue to flout laws against robocalls as well as so-called consent farms, or firms that provide people's phone numbers to robocallers while falsely claiming that consumers have agreed to receive calls. Federal and state authorities will also target providers of internet phone service that enable illegal robocalls, he added.

The FTC — along with officials from the Federal Communications Commission and U.S. Department of Justice as well as state prosecutors from Ohio and Illinois — have already filed complaints against two of the nation's largest consent farms as part of the push to step up the government's fight against robocalls.

"Tricking customers into agreeing to robocalls is not clever, it's not innovative — it's illegal," Levine said in a news conference. "I know this is not what robocallers want to hear, but it is, and has been, the law."

Telemarketing firms may not simply rely on lead-generation firms to claim that a consumer has provided their consent to receive robocalls, according to the FTC. Rather, telemarketers must obtain consent directly from the individual who is called.

Spam-demic

"It is hard to overstate the role that these consent farms play in our country's epidemic of spam calls," Levine said. "They are fueling fraud and opening the door to billions of robocalls but with the actions being announced today the FTC and our partners are going to shut that door and lock it." 

Federal regulators filed a complaint against Fluent, a New York-based publicly traded media company that allegedly operated as a consent farm from January 2018 to December 2019. FTC officials accuse Fluent of creating fake websites that promise job offers or gift cards to Walmart or UPS. Site users were encouraged to complete a form that includes their personal information, and Fluent would then allegedly sell that data to telemarketers, the complaint claims.

Fluent sold more than 620 million personal data leads to robocallers, and the company now faces a $2.5 million settlement payment, the FTC said. 

Fluent told CBS MoneyWatch that the company shares "the FTC's concerns about the use of robocall technology."

"Fluent has worked tirelessly and collaboratively with the FTC for over three years, and we are pleased to have reached a resolution," the company said in its statement. "Importantly, our settlement with the FTC includes no admission or finding of wrongdoing, and we are confident that our telemarketing consent practices comply with all legal requirements."

Federal regulators also took legal action against Viceroy Media, a digital marketing company in California that allegedly used websites to capture consumers' personal information. In a separate complaint, the FTC accused Viceroy of operating quick-jobs.com and localjobindex.com as a front for capturing personal data. The company's two owners — Sunil Kanda and Quynh Tran of California — then sold the data to robocallers, the FTC alleged. 

Viceroy didn't immediately respond to a request for comment. 

"This is really a comprehensive crackdown, not only on telemarketers but those like voice providers and consent farms, who make their fraud possible," Levine said.

"Plague of locusts"

Federal and state authorities have for years tried to stamp out unlawful robocalls, including those to people on the FTC's Do Not Call Registry. In 2021, three brothers from New Jersey paid a $1.6 million settlement for their role in instigating more than 45 million illegal robocalls.

In another action taken against a major telemarketer, attorneys general from nearly every U.S. state filed a lawsuit in May against Avid Telecom, which was accused of making more than 7.5 billion robocalls to people on the FTC's no-call list. Those calls related to the Social Security Administration, Medicare, auto warranties, Amazon, DirecTV, credit card interest rate reduction and employment, according to the suit. 

Americans received 50.3 billion robocalls in 2022, roughly the same number as 2021, according to YouMail data. Many calls involve scams. In 2022, phone scams yielded a median loss of $1,400 per person, according to the FTC. 

"Robocallers are like a plague of locusts, using modern-day technology to swarm through the international telecommunications landscape, deceiving, scamming, defrauding thousands of our constituents every single day," Ohio Attorney General Dave Yost on Tuesday.

In:
• Federal Trade Commission
• United States Department of Justice
• Scam Alert

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch covering business, consumer and financial stories that range from economic inequality and housing issues to bankruptcies and the business of sports.

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