California-based Response Tree LLC and its president, Derek Thomas Doherty, will be banned from making robocalls or assisting others in doing so under a proposed order settling Federal Trade Commission (FTC) charges. The order also prohibits calls to phone numbers listed on the FTC’s Do Not Call (DNC) Registry.
Response Tree and Doherty were charged with operating more than 50 websites designed to deceive consumers into providing personal information under the pretense of receiving quotes for mortgage refinancing loans and other services. These leads were then sold to telemarketers who used them to conduct nationwide, illegal telemarketing campaigns, including robocalls.
This case highlights the potential risks facing lead generators who engage in deceptive practices, and it may prompt significant changes within the industry. It underscores the importance of transparency and ethical practices in lead generation, particularly when dealing with sensitive consumer information.
According to the FTC complaint, the defendants’ websites functioned as “consent farms,” employing deceptive “dark patterns” to trick consumers into divulging their personal information. These sites obscured disclosures about how the information would be used. The defendants claimed that consumers consented to receive telemarketing calls by providing this information.
The FTC alleges that third parties bought these leads and used the information for illegal telemarketing campaigns, selling products and services such as solar panels, hearing aids, and extended auto warranties. Consumers did not give their consent to receive these calls, which included robocalls and calls to numbers on the DNC Registry.
One of the defendants’ websites, PatriotRefi.com, allegedly tricked consumers into providing personal information under the guise of requesting a quote for a home mortgage refinance loan. However, instead of receiving loan quotes, the consumers’ information was captured and sold to telemarketers.
At their peak, the defendants’ operations allegedly offered an average of 10,000 “real-time” leads for sale every day, with some days offering up to 50,000 illegally farmed leads. Between 2019 and 2022, Response Tree and Doherty sold millions of deceptively collected leads.
The proposed order, which awaits court approval, bans the defendants from initiating or assisting in telemarketing robocalls, calling numbers on the DNC Registry, and from selling, transferring, or disclosing consumer information in connection with lead generation activities.
The order also imposes a $7 million judgment against the defendants, which will be suspended due to their inability to pay. However, if it is later discovered that they misrepresented their financial condition, the full amount will become due immediately.
This case serves as a cautionary tale for lead generators and telemarketers alike, emphasizing the importance of ethical practices in gathering and using consumer information. It may lead to increased scrutiny and regulatory oversight in the industry, affecting the strategies and operations of both lead generators and the companies that purchase those leads.
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