Oh, what a tangled web they weave,
When with telemarketing scams they do deceive.
Sir Walter Scott – no, it wasn’t Shakespeare – didn’t have deceptive telemarketing or illegal robocalls in mind when he penned the original version of that couplet. But peel back the façade of an illegal telemarketing operation and you’re likely to find a convoluted network of companies and individuals lending a harmful hand to the detriment of consumers. The FTC’s $1.95 million settlement with Globex Telecom, Inc. and 9506276 Canada, Inc., is just one example. It brings to a close the first federal consumer protection action against a Voice over Internet Protocol (VoIP) service provider for assisting an illegal telemarking and robocalling scheme. The settlement imposes client screening and monitoring requirements on Globex to help ensure it won’t service unlawful telemarketing schemes in the future.
Here’s the short version of how the scheme worked. Last year, the FTC and the Ohio Attorney General sued an outfit called Educare Centre Services, three related companies, and four Canadian nationals – Mohammad Souheil, Sam Madi, Wissam Jilal, and Charles Kharouf – for bilking consumers out of millions of dollars with a bogus credit card interest rate reduction scheme. A few months later, the FTC and Ohio AG amended their complaint to add VoIP provider Globex and 9506276 Canada as defendants, alleging that Globex provided Educare with the means to pitch their phony promotions, including via illegal robocalls. The complaint also charged that Globex and Educare were controlled by defendant Souheil, Globex’s former CEO and president. In addition, the FTC and Ohio AG settled a lawsuit last year against Madera Merchant Services, a rogue payment processor that illegally collected payments from Educare’s victims via remotely created payment orders.
The just-announced settlements, including the settlement with Globex, are designed to address conduct challenged in that case and to protect consumers from future illegalities. Among other things, the settlement with Educare, Madi, Jalil, and Kharouf bans them for life from telemarketing in the United States, prohibits them from marketing debt relief products or services, prohibits misrepresentations about any other product or service, and imposes a financial judgment, which will be partially suspended based on their financial circumstances.
The proposed order against defendant Souheil contains the same lifetime bans and prohibitions. It also prohibits Souheil, any of Souheil’s immediate family members, and defendants Charles Kharouf and Sam Madi from being hired or acting as officers or managers of any of the Globex defendant companies. In addition, Souheil and two companies he controls – Prolink Vision, S.R.L., and 9896988 Canada, Inc. – are subject to a monetary judgment of $7.5 million, which will be partially suspended upon payment of $150,000.
FTC settlements address the conduct challenged in the complaint as unlawful and apply just to those defendants. The proposed order against Globex contains conduct provisions that reflect the FTC’s commitment to the ongoing fight against illegal telemarketing and robocalls.
Required screening of clients. You’ll want to read the proposed order for details, but before providing VoIP services, Globex and its subsidiaries must follow a detailed protocol for screening existing, new, and prospective clients. That includes getting a description of the company’s business, their physical and billing addresses, and at least two trade or bank references. For prospective clients who are telemarketers or offshore VOIP providers, that includes getting the names of the company’s principals, the names of people who have a majority ownership interest, and the name of the employee responsible for Telemarketing Sales Rule compliance. Moreover, for telemarketers, Globex also must obtain their National Do Not Call Registry Subscription Account Number and a description of the goods and services they sell.
Prohibitions on providing services to certain clients. To prevent Globex and its subsidiaries from once again doing business with parties that might be engaged in illegal activity, the proposed order puts a number of protections in place, including provisions:
- prohibiting them from providing VoIP services to clients who pay for services via stored-value cards, cryptocurrency, or money-transfer;
- prohibiting them from providing VoIP services to clients who don’t have a public-facing website or social media presence;
- requiring them to re-screen any client who is subject to a subpoena or similar investigative request from a government agency; and
- prohibiting them from providing VoIP services to anyone Globex or its subsidiaries knows is the subject of a formal written request from a government agency, a subpoena, a civil investigative demand, a Traceback Request, or a line carrier complaint unless Globex follows a process detailed in the order for assessing and monitoring the company.
Prohibition on assisting certain calls. Under the terms of the proposed order, Globex and its subsidiaries must block certain classes of suspicious calls, including calls attempting to use as a caller ID the numbers 911, 1911, or 10911; any known unassigned telephone number; and any International Premium Rate Number. They also must block the use of spoofing, using methods described in the order. In addition, they must terminate their relationship with any telemarketer that: 1) receives three or more USTelcom Traceback Requests (an official industry complaint about unlawful calls) or line carrier complaints in a 60-day period; or 2) is the subject of a total of three or more subpoenas or civil investigative demands from government agencies during any twelve-month period.
Why the emphasis on transparency? To smoke out scammers who hide behind VoIP providers and to discourage VoIP providers from assisting scammers’ illegal conduct.
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