The Federal Communications Commission today proposed a $225 million fine for health-insurance telemarketers who “made approximately 1 billion spoofed robocalls across the country during the first four and a half months of 2019.” But the FCC’s track record in collecting on proposed fines is so poor that the fine is unlikely to ever be collected at anywhere close to the proposed amount.
Rising Eagle, a Texas-based health insurance telemarketer, made 1 billion calls “on behalf of clients that sell short-term, limited-duration health insurance plans,” the FCC said. Here’s how the FCC described the robocalls:
The robocalls falsely claimed to offer health insurance plans from well-known health insurance companies such as Aetna, Blue Cross Blue Shield, Cigna, and UnitedHealth Group. For example, one call stated: “Are you looking for affordable health insurance with benefits from a company you know? Policies have all been reduced nationwide such as Cigna, Blue Cross, Aetna, and United just a quick phone call away. Press 3 to get connected to a licensed agent or press 7 to be added to the Do Not Call list.” If they did press 3, consumers were transferred to a call center with no affiliation to the named companies, where call center representatives then would attempt to convince the consumer to purchase an insurance product sold by one of Rising Eagle’s clients. Rising Eagle’s largest client, Health Advisors of America, was sued by the Missouri Attorney General for telemarketing violations in February 2019.
The proposed $225 million fine is for “apparent violations by John C. Spiller and Jakob A. Mears, who used business names including Rising Eagle and JSquared Telecom,” the FCC said. It’s a proposed fine because that’s how the FCC process works: the commission issues a Notice of Apparent Liability for Forfeiture containing allegations, and the alleged robocaller is given an opportunity to respond and provide evidence. The process can end in a settlement or a fine that cannot exceed the proposed amount of $225 million. The amount of $225 million would be the largest-ever FCC fine, but the commission has a disappointing track record in collecting on these proposed penalties.
“Over the last several years the FCC has levied hundreds of millions in fines against robocallers just like the folks we have here today. But so far collections on these eye-popping fines have netted next to nothing,” FCC Commissioner Jessica Rosenworcel, one of two Democrats on the Republican-majority commission, said in a statement sent to reporters today. “In fact, it was last year that The Wall Street Journal did the math and found that we had collected no more than $6,790 on hundreds of millions in fines. Why? Well, one reason is that the FCC looks to the Department of Justice to collect on the agency’s fines against robocallers. We need them to help. So when they don’t get involved—as here—that’s not a good sign.”
According to the FCC press release, “Spiller admitted to the USTelecom Industry Traceback Group that he knowingly called consumers on the Do Not Call list as he believed that it was more profitable to target these consumers. He also admitted that he made millions of calls per day, and that he was using spoofed numbers.”
The FCC investigation into Rising Eagle found that its calls “were spoofed in order to deceive consumers, targeted millions of Do Not Call list participants, and were received on many wireless phones without prior consumer consent.” The Rising Eagle “scam also caused the companies whose caller IDs were spoofed to become overwhelmed with angry call-backs from aggrieved consumers. At least one company was hit with several lawsuits because its number was spoofed, and another was so overwhelmed with calls that its telephone network became unusable.”
Spoofing of Caller ID lets callers hide their identities by making phone calls appear to come from other numbers. The FCC, following instructions from Congress, is mandating that carriers deploy the STIR/SHAKEN framework that uses digital certificates to verify the accuracy of Caller ID. The FCC has also been pressuring US-based carriers to stop accepting suspicious foreign call traffic, but the robocall problem is so big that it may never be fully solved.
Update at 3:30pm ET: After this story published, FCC Chairman Ajit Pai announced that seven state attorneys general today sued Rising Eagle and the other robocallers in the case in US District Court for the Southern District of Texas. The court complaint seeks a permanent injunction and damages of up to $3,000 for each violation.