Proposed fine of $225 million for men accused of placing at least a billion robocalls
In its ongoing battle against unwanted and scam robocalls, the Federal Communications Commission has proposed the largest fine in its history: $225 million, levied against two men in Texas and their companies. The FCC says that John C. Spiller and Jakob A. Mears, doing business under companies named Rising Eagle and JSquared Telecom, made more than a billion robocalls promoting health insurance.
Rising Eagle, the FCC said, made approximately 1 billion spoofed robocalls across the U.S. in the first four and a half months of 2019 to hawk short-term health insurance.
“Mr. Spiller admitted to the USTelecom Industry Traceback Group that he knowingly called consumers on the Do Not Call list as he believed that it was more profitable to target these consumers. He also admitted that he made millions of calls per day, and that he was using spoofed numbers,” the FCC said in a release. Those robocalls, it said, “falsely claimed to offer health insurance plans from well-known health insurance companies such as Aetna, Blue Cross Blue Shield, Cigna, and UnitedHealth Group,” but if a customer did press a number to be connected to an agent, they were “transferred to a call center with no affiliation to the named companies, where call center representatives then would attempt to convince the consumer to purchase an insurance product sold by one of Rising Eagle’s clients. Rising Eagle’s largest client, Health Advisors of America, was sued by the Missouri Attorney General for telemarketing violations in February 2019.”
The fine is not final, and the defendants will have a chance to respond to the FCC’s accusations.
In a statement, FCC Chairman Ajit Pai said that the Rising Eagle operation was particularly “insidious” from a consumer standpoint, because they deliberately included numbers that were on the Do NoT Call registry. He also noted some of the collateral damage of the robocalls (in addition to annoyance, time wasted and the bait-and-switch nature of the offers). “One disabled and elderly recipient attested to having fallen down attempting to answer these repeated calls. The scam also caused the companies whose Caller IDs were spoofed by Rising Eagle to become overwhelmed with angry call-backs from aggrieved consumers. At least one company was hit with several lawsuits because its number was spoofed, and another was so overwhelmed with calls that its telephone network became unusable,” Pai said.
In a related lawsuit filed in U.S. District Court for the Southern District of Texas, seven state attorneys general filed a lawsuit and request for injunction against the same two men. The court filing said that the two men are in the business of generating and selling sales leads and placed millions of calls to home and cellular phones in Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio, Texas and other states, advertising healthcare products and extended warranties for automobiles.
The two men allegedly started Rising Eagle first as a robocalling operation, then created a second company, JSquared, in mid-January of this year to conduct robocalls as well and also formed a business entity in the Cayman Islands with which to associate both companies. JSquared is registered with the FCC as a voice-over-internet-protocol interconnect services.
According to the state AGs’ filing, the two men are accused of initiating at least 136 million robocalls to Texas residents between January and May of last year, along with more than 56 million robocalls to Ohio residents, 44 million to North Carolina, 42 million to Michigan residents, 25 million to residents of Indiana, and more than 11 million robocalls to Arkansas resident. Many numbers were on the Do Not Call registry, and the complaint alleges that the operation used spoofing — including neighbor spoofing, where a recipient’s local exchange is spoofed to make it appear that the call originates locally — or used called ID names such as “Health Hotline” or “We Care Health” that they weren’t authorized to do business under.
Despite the large amount of the FCC’s proposed fine, FCC Commissioner Jessica Rosenworcel noted that the agency doesn’t have a great track record of actually collecting any appreciable amounts from robocallers.
“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,” Rosenworcel said, citing a Wall Street Journal article from last year that found the FCC had collected just $6,790 of $208 million in fines. Rosenworcel supported the fine nonetheless, but added that the FCC depends on the Department of Justice to actually collect on those fines. “I only wish that we had a whole-of-government effort to not only announce a big fine but do what is really meaningful—and that’s collect,” she said.