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Must Use Due Diligence When Buy From Lead Generators

Companies that use lead generators must exercise due diligence when they buy lists of phone numbers.

The FTC, settled a complaint against Versatile Marketing Solutions (VMS), a Massachusetts-based home security company, that illegally called millions of consumers on the National Do Not Call (DNC) Registry to pitch home security systems.

According to the Complaint, VMS, under the guidance of its owner, Jasjit Gotra, called millions of consumers whose names and phone numbers VMS bought from lead generators. The lead generators claimed that those consumers had given VMS permission to contact them about the installation of a free home security system, but in reality, they had not. The FTC alleges that the defendants’ tactics violated the Telemarketing Sales Rule (TSR) .

In addition, the complaint alleges that VMS ignored warning signs that the lead generators were engaged in illegal telemarketing practices. For example, many consumers contacted by VMS complained that they had not given the company permission to call, nor had they given permission to receive a robocall. Despite mounting complaints, VMS continued buying leads from the same lead generators, and calling consumers using those leads.

According to the complaint, between November 2011 and July 2012, VMS made more than two million calls to consumers to try to sell home security goods and services. Of those calls, at least one million were to phone numbers listed on the DNC Registry, and more than 100,000 were to consumers who had previously told VMS not to call them again.

The order settling the charges prohibits VMS and Gotra from making abusive telemarketing calls and from calling any consumer whose number is on the DNC Registry, unless: 1) they can prove that they have received written permission to make the call; or 2) that they have an established business relationship with that consumer. Further, it bars VMS and Gotra from calling any consumer who has previously told VMS not to call them again. Lastly the order imposes a $3.4 million penalty judgment against the defendants, with all but $320,700 suspended due to their inability to pay.

This case serves as an important reminder that companies who rely on lead generators must use due diligence before and while making calls.

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