The Federal Trade Commission (FTC) put an end to the litigation in the “Pointbreak Media” robocall case, an action filed by the agency in 2018 against multiple individual and corporate defendants that operated a telemarketing scam.
The FTC alleged in Florida federal court that the defendants targeted small businesses by using robocalls with false threats of removal from Google’s search engine as well as fake promises of helping the call recipient find unique keywords that would make the businesses appear prominently in search results. Call recipients were duped into paying hundreds of dollars to claim and verify their business listings.
During the seven-week period between July 3, 2017, and Aug. 25, 2017, one of the defendants alone made nearly 75 million robocalls, almost 15 million of which were to telephone numbers on the National Do Not Call (DNC) Registry, the agency said.
The complaint listed violations of Section 5 of the FTC Act for deceptive representations and unfair billing practices, as well as the Telemarketing Sales Rule (TSR) based on unlawful prerecorded messages and robocalls to numbers on the DNC Registry.
Every defendant in the case settled with the agency or defaulted with the exception of Dustin Pillonato and Justin Ramsey, along with their related businesses Pointbreak Media and Modern Source Media.
The FTC moved for summary judgment, along with a permanent injunction and a money judgment of $3,367,666.30 (the defendants’ net revenues), jointly and severally, against Pillonato and Ramsey. Accepting a magistrate judge’s report and recommendation, U.S. District Judge Cecilia M. Altonaga granted the motion.
Not only had the agency established that the defendants made false, misleading and unsubstantiated representations in violation of Section 5(a) of the FTC Act, but the court agreed Pillonato and Ramsey could be liable for the conduct of other co-defendants under a common enterprise theory, as well as be personally liable.
The court rejected the defendants’ argument that an issue of material fact remained as to whether they were part of a common enterprise, noting the “extensive cooperation” between Pointbreak Media, Modern Source Media and other defendants, including the sharing of client data and the fact that employees did not distinguish between the companies, telling consumers they were a single business. Further, the companies shared a credit card merchant account, used similar robocall and live sales agent scripts, and shared office space.
Judge Altonaga also found that the defendants were personally liable for the deceptive sales practices because they directly participated, providing phone numbers for the defendants to robocall and a merchant account for them to use. At a minimum, Pillonato and Ramsey should have known of the companies’ deceptive sales practices, the court added.
With regard to the TSR counts against the defendants, the court was not persuaded that the business-to-business exception under the TSR should apply. The TSR exempts “[t]elephone calls between a telemarketer and any business to induce the purchase of goods or services,” and the defendants asserted that any calls made from Pointbreak Media or Modern Source Media received by nonbusinesses were in error.
“Even if this assertion were supported by the evidence, defendants’ subjective intentions are irrelevant, as the business-to-business exemption only applies to telephone calls between telemarketers and businesses,” Judge Altonaga wrote.
The court also accepted the FTC’s proposed judgment of more than $3.3 million, jointly and severally, against the defendants, as well as a permanent ban on telemarketing and remotely created payment orders. Although the defendants argued the ban on telemarketing was overbroad and prohibited them from using a telephone in conducting any business, their interpretation of the order was faulty, the court said.
Pursuant to the order, Pillonato and Ramsey are precluded only “from using telephones as part of a telemarketing sales campaign,” the court wrote. “Defendants are otherwise free to use telephones in connection with any job or business.”
Given the defendants’ history of unlawful marketing—including two orders in Florida state court enjoining them from engaging in telemarketing fraud—the telemarketing ban in the order was not overbroad, Judge Altonaga concluded.
To read the order in FTC v. Pointbreak Media, LLC, click here.
Why it matters: In addition to the order granting summary judgment in favor of the FTC against the two defendants and their related corporate entities, several others settled with the agency and agreed to similar bans on telemarketing as well as millions of dollars in judgments, putting an end to the robocalling scheme characterized by the commission as “massive,” and reminding companies about the dangers of robocalls.