Court Orders Defendants to Pay $3.4 Million in “Unjust Gains”
At the Federal Trade Commission’s request, a U.S. district court has prohibited Jason Abraham, a repeat offender, and his company, Brooklyn-based Instant Response Systems (IRS) from calling elderly consumers and bullying and tricking them into paying for unordered medical alert devices. The court also imposed a $3.4 million judgment against the defendants for their misconduct, which may be used to provide refunds to defrauded consumers.
“Instant Response Systems lied to older people to get them to pay for medical alert systems they didn’t order and didn’t want,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “Their high-pressure, deceptive phone pitches were illegal, and they violated the do not call rules to boot.”
According to the FTC’s complaint, filed in March 2013, telemarketers for IRS called elderly consumers – many of whom are in poor health and rely on others for help with their finances – and pressured them into buying a medical alert service consisting of a pendant that supposedly would allow them to get help during emergencies. In many cases, IRS falsely claimed during sales calls that consumers had bought the service previously and owed the company hundreds of dollars.
The company shipped fake invoices and unordered medical alert pendants to consumers without their consent, repeatedly threatened them with legal action to coerce them into paying, and subjected them to repeated verbal abuse. The FTC also charged the defendants with illegally calling consumers whose phone numbers are on the National Do Not Call (DNC) Registry.
The court order issued with the summary judgment announced today imposes both conduct and monetary provisions against Abraham. First, it bars him from violating the FTC Act and the FTC’s Telemarketing Sales Rule by making any false and misleading statements to induce consumers to make payments, using threats or intimidation to coerce payment, and from calling consumers whose phone numbers are on the DNC Registry. It also bars him from violating the FTC’s Unordered Merchandise Statute. Finally, the court ordered Abraham to pay a judgment of $3,432,462, the amount of the “unjust gains” he received through the scheme.
In its ruling, the court stated, “There is no genuine dispute that [the] defendants, in letters and phone calls, made material misrepresentations that consumers ordered medical alert services and owed IRS money when, in fact, they did not.” The court also found that Abraham “knowingly made misrepresentations to hundreds of consumers over a five-year period, all while subject to a permanent injunction issued in 2003 . . . which prohibited him from such conduct.”
The summary judgment resolves the FTC’s charges against Jason Abraham. Last year, the court entered a default judgment against Abraham’s company, Instant Response Systems, LLC that resolved the FTC’s charges against the company and orders injunctive and monetary relief similar to the summary judgment order against Abraham.
The FTC appreciates the assistance of the New York State Attorney General’s Office and the U.S. Postal Inspection Service, in this case.
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 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.
Mitchell J. Katz
Office of Public Affairs
Bureau of Consumer Protection