Robocalls: Frauds Caught And Fined $225 Million

The Federal Communications Commission (FCC) announced Tuesday, June 9, that they are demanding a record breaking fine of $225 million from a fraudulent Texas-based insurance telemarketing firm. 

The FCC alleges that John C. Spiller and Jakob Mears, through companies including Rising Eagle Capital and JSquared Telecom, made 1 billion robocalls across the country during the first four-and-a-half months of 2019 on behalf of clients that sell short-term, limited-duration health insurance plans.

“We are making it clear that scamming consumers and, as we saw in this case, tricking them into buying products under false pretenses cannot and will not go unchecked,” said Ajit Pai, FCC Chairman. “That is why the FCC and state officials are standing together and taking strong action to protect the American public from the scourge of spoofed robocalls.”

The fraudulent crimes

The robocalls targeted consumers on the Do Not Call list because he believed that it was more profitable to target those consumers. According to the FCC, Spiller also admitted that he made millions of calls per day using spoofed numbers that resembled numbers belonging to the call recipient’s friends or family members in seven states including: Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio and Texas.

According to the FCC press release, Spiller admitted “that he knowingly called consumers on the Do Not Call list as he believed that it was more profitable to target these consumers,” that “he made millions of calls per day, and that he was using spoofed numbers.”

The crimes first began in 2019, as the companies attempted to sell consumers fraudulent, short-term health insurance plans from major insurance carriers such as Aetna, Blue Cross Blue Shield, Cigna, and UnitedHealth Group, but consumers would instead be transferred to a fraudulent call center with no affiliation with the companies named.

Scam victims were lured in by telemarketing that pitched policies from other providers that were Rising Eagle’s clients, the FCC said.

Following the proposed FCC fine, attorneys general for the seven states filed a lawsuit on Tuesday seeking damages, penalty, and an injunction against Rising Eagle, JSquared Telecom, and two men accused of controlling both businesses.

Will the fine be collected?

Though the $225 million penalty is hugely impressive, Jessica Rosenworcel, one of the FCC’s five commissioners, challenged the legitimacy of the fine. 

“Over the last several years the FCC has levied hundreds of millions in fines against robocallers just like the folks we have here today. But so far collections on these eye-popping fines have netted next to nothing,” said Rosenworcel.

Rosenworcel used a 2019 Wall Street Journal article as evidence of unpaid fines against robocallers that were set for $208 million, and yet only $6,790 was actually collected.

“Why? Well, one reason is that the FCC looks to the Department of Justice to collect on the agency’s fines against robocallers. When they don’t get involved, as here, that’s not a good sign,” Rosenworcel continued.

Geoffrey Starks, FCC commissioner, echoed Rosenworcel’s concern. 

“The threat of large fines as a deterrent means nothing if we systematically fail to actually collect on them,” Starks said. “We must work harder to ensure on the back end that our enforcement efforts reap actual, measurable results, and then be transparent about how we’re going to put violators on notice that we mean business.”

Future protection

In a related action, state attorneys general from Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio, and Texas sued Spiller and Mears and their companies for violations of the Telephone Consumer Protection Act, the federal law governing telemarketing. This would hold companies responsible for a $500 fine for each individual violation with the possibility of triple damages, if the violations are found to be willful. 

The FCC enforcement action cohensides with the agency’s approval of new guidelines in April that require all U.S. phone companies to install new consumer protections against robocalls.

The guidelines, which are in line with a recent federal anti-robocall law, require telecommunications providers to implement so-called Shaken/Stir authentication technology that will help customers identify who’s actually calling. The new safeguards will be free to consumers and go into effect by the end of June 2021.

“It’s important to hold robocallers accountable, so we’re glad that the FCC has proposed a historic fine for these apparent robocall violations,” says CR policy analyst Maureen Mahoney. 

“But historically, enforcement hasn’t been enough to rein in robocallers, especially since it’s difficult to recover the penalties. The FCC should continue to work to ensure that phone companies implement anti-robocall technology to help stop unwanted robocalls before they reach consumers,” says CR’s Mahoney.

How to protect yourself from robocalls

Don’t answer numbers you don’t recognize. If the caller ID says “unknown number” or “telemarketer” or “spam risk”, simply do not answer the phone. If a number pops up that you do not recognize, let it go to voicemail. If you are certain it is a scam, block the number.

Save important phone numbers in your phone. Before you leave somewhere important like the pharmacy or doctor’s office, ask what phone number you can expect if you get a call from them. Save this in your phone so you don’t feel compelled to answer unrecognized numbers. 

Don’t speak. If you answer a call from an unrecognized number, you can test the call by simply not saying anything. If you wait to say “hello” and then a recording starts to play, hang up and block the number. 

Create passwords to protect your voicemail. If you’re able to do so, set up a password for your voicemail. If a robocall spoofs your phone number, the scammer coils potentially hack into your voicemail and steal sensitive information, which may be stored in your messages.  

Just hang up. Some robocallers will end their sales pitch with an option to press a number and or answer “yes” or “no” to a question. This is a trick to con you into accepting future calls. Just hang up.

Don’t trust calls from government agencies. Social Security and Medicare scams are common. If you receive a call from a person or recording claiming to be with Medicare, Social Security, or another government agency, do not believe them. Most government agencies will never contact you by phone, and they certainly will never ask for your personal information over the phone, like your Social Security number or bank account.Use call-blocking services. Until the law starts to reduce the number of robocalls Americans receive, you can use robocall-blocking services, like YouMail, to block robocalls for you.

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