Proposed Order Will Bar List Broker from Helping Telemarketers Defraud Consumers

Defendant Charged with Two Telemarketing Sales Rule Violations

For Release

Under the terms of a settlement announced by the Federal Trade Commission today, a list broker, formerly based in Arizona, and the two companies he ran have agreed to a proposed court order barring them from violating the agency’s Telemarketing Sales Rule (TSR). The proposed order settles a Commission complaint charging that the defendants assisted and facilitated telemarketers of fraudulent “advance-fee” credit cards by providing them with unencrypted consumer information.

The FTC complaint alleged the defendants sold “full data leads” to these telemarketers that included consumers’ bank account and routing information, credit card numbers, credit card security codes, and credit card expiration dates, without first obtaining authorization from consumers to do so, all the while knowing that the data would be used in schemes designed to mislead and defraud consumers. The proposed order also contains a suspended $120,000 judgment against the defendants. The full judgment will be imposed if they are found to have misrepresented their financial condition.

According to the Commission, defendant Glenn L. Patten, operating individually and through two companies in which he was the principal and only officer, violated the TSR while working as a list broker between 2002 and 2007. Operating his businesses from an apartment in Chandler, Arizona, the FTC contends that Patten sold full data leads to a variety of sources, including telemarketers – many of whom were involved in trying to sell advance-fee credit cards to consumers.

The Commission’s complaint charges Patten with assisting and facilitating telemarketers who falsely represented to consumers that after paying an advance-fee consumers were guaranteed to receive a credit card, while knowing, or consciously avoiding knowing, that the telemarketers were engaged in conduct that was in violation of the TSR. In addition, the complaint charges Patten with assisting and facilitating the actions of telemarketers by providing them with unencrypted consumer account information in the full data leads he sold them. The TSR specifically prohibits providing telemarketers with such unencrypted information.

The proposed order announced today contains both injunctive and monetary relief. First, it bars the defendants from collecting, selling, renting, or disclosing consumers’ account numbers, with certain limited exceptions. It also requires Patten to provide the FTC with any lists of account numbers and destroy all other copies. The goal of these provisions is not to bar Patten from selling customer lists, but from selling consumers’ non-public information. It applies to all information used in telemarketing, as well as other types of marketing, such as direct mail or e-mail spamming.

Next, the proposed order bars Patten from failing to monitor clients “in connection with collecting, selling, renting, brokering, purchasing, transferring, or otherwise disclosing any information about consumers.” Specifically, the proposed order requires Patten to evaluate the nature of the products or services being offered to consumers and the truthfulness of the sales pitch; investigate any complaints he gets about his clients; end services to clients who make material misrepresentations, engage in unauthorized billing, or violate other terms of the proposed order; and report terminated clients to the FTC. Finally, the proposed order prohibits Patten from violating the TSR or providing help or support to anyone else in violating the TSR. The proposed order also contains standard monitoring and record-keeping requirements to ensure his compliance with its terms.

The proposed order imposes a $120,000 judgment against Patten, which has been suspended based on his inability to pay. However, it includes a “right to reopen” clause that would allow the Commission to collect the full amount if it later finds that he misrepresented his financial condition.

The action announced today settles the Commission’s complaint against the following defendants: Glenn L. Patten, individually, and doing business as Glenn L. Patten Marketing Solutions and as Marketing Solutions. The Commission vote authorizing the filing of the complaint and stipulated final order was 4-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division on September 29, 2008, and the proposed order was submitted to the court on September 30, 2008. The FTC would like to acknowledge the assistance of the U.S. Postal Inspection Service, which initially investigated this case, as well as the work of the U.S. Attorney’s Office for the Southern District of Illinois on this matter.

NOTE: This stipulated final order is for settlement purposes only and does not constitute an admission by any defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the stipulated final order will be available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's Web site provides free information on a variety of consumer topics.

(Glen Patten.final.wpd)
(FTC File No. 062-3052; Civ. No. 08CV5560)

Contact Information

MEDIA CONTACT:
Mitchell J. Katz,
Office of Public Affairs
202-326-2161
STAFF CONTACT:
Theresa M. McGrew
FTC Midwest Region, Chicago
312-960-5634