In 2020, the Federal Trade Commission (FTC) took action against Phone Burner for allegedly violating the Telemarketing Sales Rule (TSR) and the Consumer Financial Protection Act (CFPA). In this article, we will discuss the FTC action against Phone Burner and its implications.

What is Phone Burner?

Phone Burner is a cloud-based software that automates outbound calling for businesses. It allows businesses to upload their leads and automate their outbound calls. The company claims to increase the productivity of businesses by allowing them to make more calls in less time.

FTC Action Against Phone Burner

In October 2020, the FTC filed a complaint against Phone Burner for allegedly violating the TSR and the CFPA. The complaint alleged that the company had made numerous robocalls to consumers without obtaining their prior express written consent. The FTC also alleged that the company had failed to disclose its identity during the calls, which is a violation of the TSR.

The FTC further alleged that the company had provided substantial assistance to its clients who were engaged in fraudulent telemarketing schemes. The company allegedly knew or should have known that its clients were engaged in fraudulent schemes but continued to provide services to them.

The FTC’s complaint sought an injunction to prevent Phone Burner from violating the TSR and the CFPA. The FTC also sought monetary relief, including restitution for affected consumers and disgorgement of ill-gotten gains.

Settlement Agreement

In November 2020, Phone Burner agreed to settle the FTC’s complaint. As part of the settlement agreement, they agreed to pay $1.1 million in monetary relief. The settlement also required them to comply with the TSR and the CFPA in the future.

Under the settlement, Phone Burner was also required to screen its clients to ensure that they were not engaged in fraudulent telemarketing schemes. They were also required to terminate its services to any client engaged in fraudulent schemes and report any such clients to the FTC.

Implications

The FTC’s action against Phone Burner has several implications for businesses engaged in telemarketing. The action highlights the importance of obtaining prior express written consent before making robocalls to consumers. It also underscores the importance of complying with the TSR, which requires telemarketers to disclose their identity during the calls.

The action also emphasizes the need for businesses to screen their clients and ensure that they are not engaged in fraudulent telemarketing schemes. Businesses that provide services to telemarketers may be held liable if their clients engage in fraudulent schemes.

In addition to these implications, the case also demonstrates the FTC’s commitment to protecting consumers from fraudulent telemarketing schemes. The FTC has been cracking down on telemarketing fraud in recent years and has taken action against numerous companies engaged in such schemes.

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