By Christine M. Reilly, Chair, TCPA Compliance and Class Action Defense | Diana L. Eisner, Associate, Litigation
Citing more than 21 million illegal calls, the Federal Communications Commission proposed an $82 million fine against Best Insurance Contracts, Inc., and owner Philip Roesel.
The agency was tipped off to the defendants’ activity by an informal complaint filed by an entity that provides paging services for hospitals, emergency rooms and physicians. The company notified the FCC of “a significant robocalling event” that was disrupting its emergency medical paging service.
Tracing the calls led to Roesel, who sells insurance plans and does business under the name Best Insurance Contracts. Through his own name and through BIC, Roesel generated insurance sales leads by making unsolicited robocalls to consumers in which he advertised the insurance products he sold, according to the agency’s Notice of Apparent Liability for Forfeiture.
The agency subpoenaed Roesel’s call records over a three-month period from Oct. 23, 2016, to Jan. 23, 2017. During this time period, Roesel and/or BIC made 21,582,771 calls, averaging over 200,000 calls per day, the FCC said, and violated both the Truth in Caller ID Act and agency rules.
Commission staff analyzed a sample of 82,106 robocalls the defendants made using four specific numbers. All the calls made that displayed one of these four numbers in the called parties’ caller IDs were not assigned to Roesel and were therefore spoofed, the agency found. The FCC also matched dozens of consumer complaints to the call records of robocalls made by Roesel.
“We find that Philip Roesel (directly or through BIC) apparently violated Section 227(e) of the Act and Section 64.1604 by knowingly causing the display of misleading or inaccurate called ID information, or ‘spoofing,’ with unlawful intent, for the purpose of aiding an illegal robocalling campaign,” the FCC alleged.
“[S]poofing, when done in conjunction with an illegal robocalling campaign (itself a harmful practice), indicates an intent to cause harm,” the agency said. In addition, the FCC had evidence of Roesel’s actual intent to violate the law.
A whistleblower told the agency that Roesel was “well aware” that his activities were illegal, telling his workers that robocalls were “a minor violation akin to driving above the speed limit.” Roesel also targeted “some of the most vulnerable members of society” for his robocalling campaign, instructing the whistleblowing employee that “the goal was to market to economically disadvantaged and unsophisticated consumers … ‘the dumber and more broke, the better.’”
Not only did the defendants’ spoofed robocall campaigns cause “significant consumer harms,” they also resulted in a major disruption to the paging network for medical service providers, the FCC said, and effectively rendered the numbers the network used unsuitable for assignment to any legitimate subscriber.
Turning to the appropriate forfeiture for Roesel’s more than 21 million spoofed telemarketing robocalls, the court looked to its recent action in In the Matter of Abramovich for guidance. In that case, the FCC proposed a $120 million fine against an individual who used “neighbor spoofing” to make more than 96 million robocalls over a three-month period.
The agency applied a $1,000 base forfeiture to each of the 82,106 spoofed calls verified by the FCC for a total of $82,106,000. The FCC then determined the facts did not warrant an upward adjustment, distinguishing Abramovich for the “fraudulent activities that were at the heart” of the robocalling campaign and noting it was the first time Roesel has run afoul of the law.
“While not as egregious as the apparent spoofing in Abramovich, it appears that Philip Roesel is highly culpable; the records show that the calls were made both by Philip Roesel in his personal capacity as well as in the name of the BIC,” the FCC wrote. “Moreover, the sheer volume of calls—21,582,771 calls in a three-month period—are egregious in number. On balance, we find that neither an upward adjustment nor a further downward adjustment to the proposed base forfeiture of $82,106,000 is necessary to punish misconduct and deter future wrongdoing.”
The agency also determined that Roesel was personally liable for the proposed forfeiture, as BIC merely functioned as an instrumentality of Roesel, and he “cannot be allowed to circumvent personal liability simply by forming a corporate entity to hide behind.”
To read the Notice of Apparent Liability for Forfeiture in In the Matter of Best Insurance Contracts, Inc., click here.
Why it matters: What is the message from the FCC with regard to spoofed robocalls? “We will do everything in our power to put you [robocallers] out of business,” Chair Ajit Pai wrote in his statement accompanying the Notice of Apparent Liability, the second multimillion-dollar forfeiture in three months from the agency. The FCC also noted that even though the two actions began with a forfeiture based on the total number of verified spoofed robocalls, “we reserve the right in the future, especially with large scale spoofing violations, to use the total number of calls made where there is a high likelihood of violations based on the use of a representative sampling of calls.”