The Federal Trade Commission today took action against Voice over Internet Protocol (VoIP) service provider VoIP Terminator, Inc., a related company, and the firms’ owner for assisting and facilitating the transmission of millions of illegal prerecorded telemarketing robocalls, including those they knew or should have known were scams, to consumers nationwide. Many of the calls originated overseas, and related to the COVID-19 pandemic, with the defendants allegedly failing to act as a gatekeeper to stop them from entering the country.

Acting on the Commission’s behalf, the U.S. Department of Justice filed the complaint announced in federal district court, along with an order permanently stopping the defendants from such illegal conduct. The order also includes a suspended civil penalty of more than $3 million.

“These defendants helped scammers blast millions of illegal robocalls into our homes,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “This is our third case in the last two years against VoIP service providers, who should take note of what happens when they ignore the law.”

The FTC’s complaint alleges Florida-based defendant VoIP Terminator, Inc., Virginia-based defendant BLMarketing, Inc., and the companies’ owner Muhammad Usman Kahn facilitated violation of the FTC’s Telemarketing Sales Rule (TSR) during their operation as a VoIP service provider.

Specifically, according to the complaint, the defendants continued to provide VoIP services to customers despite knowing or consciously avoiding knowing the customers were: 1) using the services to place calls to numbers on the FTC’s Do Not Call (DNC) Registry; 2) delivering prerecorded messages; and 3) displaying spoofed caller ID services to callers involved in scams related to credit card interest rate reduction, tech support, and the COVID-19 pandemic.

Enforcement Action

The FTC’s proposed order settling the complaint requires VoIP Terminator to:

• Stop robocalling consumers. The order bans the company from assisting and facilitating abusive telemarketing practices. This provision includes the use of VoIP services.

• Halt TSR violations. The company is prohibited from further violations of the TSR or assisting others in doing so.

• Create new procedures to block suspected robocalls. The order bans VoIP Terminator from providing services or assigning telephone numbers without having ongoing automated procedures in place to block calls that display unassigned, invalid, or unauthenticated numbers.

• Require VoIP Terminator to screen customers. For current and prospective customers, the company must ensure it does not provide VoIP services to suspected telemarketers. The order further requires the defendants to immediately terminate, or avoid entering, business relationships with customers found to be violating the TSR.

While the order imposes a $3,256,190 judgment against the defendants, it has been suspended based on the company’s inability to pay.

The Commission vote to authorize the staff to refer the complaint to the DOJ and to approve the proposed consent decree was 4-0. The DOJ filed the complaint and proposed consent decree on behalf of the Commission in U.S. District Court for the Middle District of Florida.

The Federal Trade Commission today proposed extending protections against telemarketing tricks and traps to small businesses and strengthening safeguards against other pernicious telemarketing tactics plaguing consumers. The agency is seeking comments on updates to the Telemarketing Sales Rule that would protect small businesses against business-to-business telemarketing schemes, address tech-support scams that target seniors, and extend click-to-cancel requirements to telemarketing. 

“Today we are taking aggressive action to protect small businesses and consumers from telemarketing tricks and traps,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We look forward to hearing from the public about how we can further strengthen this rule to hold telemarketing scammers accountable.”

Both the notice of proposed rulemaking and advance notice of proposed rulemaking announced today stem from the Commission’s regulatory review of the Telemarketing Sales Rule and address public comments the FTC has received as part of that review.

The current regulatory review of the Telemarketing Sales Rule began with the publication of a 2014 Federal Register notice seeking comments on general issues such as whether to retain, eliminate, or modify the rule. It also sought comment on specific issues, such as whether the rule should provide additional protections to consumers from telemarketing calls involving use of previously acquired account information and negative option offers, as well as recordkeeping requirements for sellers and telemarketers.

The Telemarketing Sales Rule

The FTC’s Telemarketing Sales Rule became law in 1995 and applies to virtually all “telemarketing” activities, both in the United States and international sales calls to consumers in the U.S. With several notable exceptions, the rule generally applies only to outbound calls made by telemarketers to consumers and protects consumers in a range of ways. For example, the rule requires telemarketers to make certain disclosures and prohibits misrepresentations during sales calls.

The Telemarketing Sales Rule ensures that telemarketers obtain a consumer’s authorization before billing or collecting payment, and prohibits telemarketers from requesting advance payments for services, such as credit repair, “guaranteed” loans, and debt settlement programs. The rule also prohibits credit card laundering by or on behalf of telemarketers and generally prohibits them from calling phone numbers on the Do Not Call Registry or plaguing consumers with robocalls, among other things.

Proposal to Protect Small Businesses and Strengthen Enforceability

The notice of proposed rulemaking announced today proposes amending the recordkeeping requirements of the Telemarketing Sales Rule and prohibiting deception in business-to-business telemarketing calls. Specifically, the notice seeks public comment on:

• Business-to-business schemes: Whether the FTC should amend the Telemarketing Sales Rule to prohibit misrepresentations in business-to-business calls, as the Commission’s experience has shown that small businesses continue to be harmed by deceptive telemarketing, and

• Recordkeeping requirements: Whether the FTC should amend the rule’s recordkeeping provisions to require telemarketers to retain information in seven new categories, such as keeping recordings of robocalls.

Addressing Other Telemarketing Tactics and Scams

The advance notice of proposed rulemaking announced today seeks information on a range of issues, some of which were identified during the previous comment period. Specifically, the agency seeks public comment on:

• Tech-support scams: Whether the Telemarketing Sales Rule should add additional provisions to address the rise in tech-support scams. These are scams where telemarketers trick consumers into purchasing unnecessary computer technology services to fix phantom problems. Generally, telemarketers who induce consumers to call them by placing deceptive internet ads are currently exempt from Telemarketing Sales Rule requirements. The advance notice of proposed rulemaking seeks comment on whether those calls should be covered by the rule.

• Click-to-cancel requirements: Whether the rule should require telemarketers to provide consumers with a simple notice and cancelation, such as click-to-cancel, when they sign up for subscription plans; and

• Robocalls and other telemarketing to small businesses: Whether the Telemarketing Sales Rule broadly should stop treating telemarketing calls made to businesses differently from those made to consumers. Generally, such calls currently are exempt from certain provisions of the rule.

The Commission vote approving publication of the notice of proposed rulemaking and advance notice of proposed rulemaking in the Federal Register was 4-0.

The Federal Trade Commission is returning more than $149 million to AdvoCare distributors who lost money as a result of the AdvoCare pyramid scheme. The FTC sued AdvoCare in 2019, alleging that the multi-level marketing company operated an illegal pyramid scheme that deceived consumers into believing they could earn significant income as “distributors” of its health and wellness products.

In its complaint against Texas-based AdvoCare, its former CEO, and its top promoters, the FTC alleged that the defendants falsely claimed to offer a life-changing financial solution that would allow any ordinary person to earn unlimited income, attain financial freedom, and quit their regular job. In reality, the FTC alleged, the vast majority of AdvoCare distributors either earned no money or lost money.

AdvoCare, the complaint alleged, operated an illegal pyramid scheme that pushed distributors to focus on recruiting new distributors rather than selling products to customers. The compensation structure also incentivized distributors to purchase large quantities of AdvoCare products—even when they couldn’t sell the products—and to recruit a downline of other participants with the same incentives.

To recruit people, the FTC alleged, AdvoCare and the other defendants told distributors to make exaggerated claims about how much money average people could make—as much as hundreds of thousands or millions of dollars a year. The FTC alleged that distributors were told to create emotional narratives about how they gained financial success through AdvoCare and to instill fear in potential recruits that they would suffer from regrets later if they declined to invest in AdvoCare.

The Commission is sending payments to more than 224,000 consumers who lost money to the AdvoCare pyramid scheme. The payments are being distributed via check and PayPal. Consumers who receive PayPal payments should redeem their payments within 30 days, and consumers who receive checks should cash them within 90 days, as indicated on the check.

Recipients who have questions about their refund should call the refund administrator, Analytics, at 855-744-1802. The Commission never requires people to pay money or provide account information to get a refund.

The U.S. Supreme Court ruled in 2021 that the Commission lacks authority under Section 13(b) to seek monetary relief in federal court going forward. The money being returned to consumers today comes from settlements that were entered before the Supreme Court’s decision. The Commission has urged Congress to restore the Commission’s ability to get money back for consumers.

The Commission’s interactive dashboards for refund data provide a state-by-state breakdown of Commission refunds. In 2020, Commission actions led to more than $483 million in refunds to consumers across the country.

The Federal Trade Commission has moved to stop internet service provider Frontier Communications from lying to consumers and charging them for high-speed internet speeds it fails to deliver. Under a proposed order with the FTC and two California law enforcement agencies, Frontier will be prohibited from tricking consumers about its slow internet service and required to support its speed claims. Frontier must also provide current customers with free and easy cancellations when it fails to deliver the promised speeds.

“Frontier lied about its speeds and ripped off customers by charging high-speed prices for slow service,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s proposed order requires Frontier to back up its high-speed claims. It also arms customers lured in by Frontier’s lies with free, easy options for dropping their slow service.”

“My office will not stand by while businesses take advantage of consumers by failing to provide them with the services they have purchased,” said Los Angeles County District Attorney George Gascón. “We will continue to work together with our law enforcement partners to make sure that companies fulfill their promises to consumers and that they refrain from making false statements in their advertisements.”

Connecticut-based Frontier advertises and sells digital subscriber line (DSL) internet service in several plans, or tiers, based on download speed. In a complaint first filed in May 2021, the FTC alleged that Frontier advertised that it could provide various speeds of DSL internet service based on the type of plan consumers purchased. Many of the subscribers to Frontier’s DSL service are in rural areas where they may only have one choice, or very limited choices, for internet service.

The FTC alleged, however, that Frontier failed to provide many consumers with the maximum speeds they were promised and the speeds they actually received often fell far short of what was touted in the plans they purchased. Some customers complained that it was difficult to engage in typical online activities that should have been possible under the plan they purchased.

In addition to prohibiting the conduct outlined in the complaint, other provisions of the proposed order: 

• require Frontier to substantiate its internet speed claims at a customer-by-customer level for new and complaining customers and notify customers when it is unable to do so;
• require Frontier to ensure it can provide the internet service speeds it advertises before signing up, upgrading, or billing new customers;
• prohibit Frontier from signing up new customers for its DSL internet service in areas where the high number of users sharing the same networking equipment causes congestion resulting in slower internet service; and
• require the company to notify existing customers who are receiving DSL internet service at speeds lower than was advertised and allow those customers to change or cancel their service at no charge.

Frontier also will be required to pay $8.5 million in civil penalties and costs to the Los Angeles County and Riverside County District Attorneys’ offices on behalf of California consumers as well as $250,000 that will be distributed to Frontier’s California customers harmed by the company’s practices. In addition, the company must discount the bills of California customers who have not been notified that they are receiving DSL service that is much slower than the highest advertised speed. Frontier is required to deploy fiber-optic internet service, which is generally much faster than DSL, to 60,000 residential locations in California over four years—at an estimated cost of $50 million to $60 million.

The Commission vote approving the stipulated final order was 4-0. Commissioner Noah Joshua Phillips issued a concurring statement. The FTC filed the proposed order in the U.S. District Court for the Central District of California.

NOTE: Stipulated final orders have the force of law when approved and signed by the District Court judge.

At the request of the Federal Trade Commission, a federal court has temporarily halted a bogus credit repair scheme known as The Credit Game for promoting a series of lies and deceptions. The FTC alleged the scheme’s operators lied to credit reporting agencies regarding information on consumers’ credit reports and pitched consumers a supposed business opportunity that was essentially starting their own bogus credit repair scheme.

“Credit repair schemes cheat those already in financial trouble, and these defendants even tried to redirect COVID-19 tax benefits into their own pockets,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We’re grateful that the court shut this scheme down and disrupted this web of deception.”

In a complaint filed against The Credit Game and its owners, Michael and Valerie Rando, the FTC alleged that the company has illegally charged consumers hundreds and even thousands of dollars for credit repair services of little to no value and told consumers to “invest” their COVID-19 governmental benefits on their unlawful services. In some cases, the company’s “services” included filing false identity theft reports with the FTC and encouraging consumers to take actions that were unlawful. The FTC asked the court to immediately halt the company’s illegal operations, appoint a receiver, and freeze the defendants’ assets. The court issued a temporary restraining order doing so on May 3, 2022.

In addition to the core credit repair scheme, the defendants have also taken advantage of the ongoing pandemic by telling consumers to “invest” pandemic tax benefits into their credit repair schemes. One advertisement used the headline “Free Credit Repair From The Government.”

The defendants are based in Florida and have operated credit repair schemes since at least 2019, first using the name Wholesale Tradelines before changing to The Credit Game in 2020. According to the FTC’s complaint, the defendants claim to have brought in more than $15 million in business through their operations.

In its complaint filed against The Credit Game and the Randos, the FTC alleges the defendants’ deceptive tactics violated the FTC Act, the Credit Repair Organizations Act (CROA), the Business Opportunity Rule, the Telemarketing Sales Rule (TSR), and the Covid Consumer Protection Act (CCPA). This includes:

• Deceptive marketing: The defendants mislead consumers in numerous ways, including lying to consumers about whether their products are legal, whether their products are effective, and whether consumers can get refunds when requested.

• Credit piggybacking: The complaint alleges that the defendants pitch a practice known as credit piggybacking. In a piggybacking scheme, a consumer seeking to raise their credit scores pays to be added as an “authorized user” to a credit card account belonging to someone with higher credit. However, the consumer is an “authorized user” in name only and does not have actual access to the account or line of credit.
• Filing false identity theft reports: As part of their efforts to remove accurate but negative information from consumers’ credit reports, the defendants filed thousands of false identity theft reports on behalf of consumers with the FTC. Knowingly filing a false identity theft report with the FTC is unlawful.
• Bogus business opportunity: In addition to selling the bogus credit repair services, the defendants also pitch consumers on a supposed business opportunity that consists of reselling the defendants’ own unlawful credit repair services. They use outlandish earnings claims as part of the sales pitch, telling one undercover FTC investigator they could make “tens of thousands” of dollars every month.
• Illegal advance fees: The defendants charge consumers for their credit repair services upfront, often thousands of dollars, using high-pressure sales tactics and failing to give consumers required information before they are pressured to buy. Charging advance fees for credit repair services is illegal.

In addition, the FTC’s investigation found that the defendants had purchased a tradeline database from previous FTC defendants William Airy and BMS, Inc., who were sued by the FTC for operating a bogus credit repair scheme in 2020, and that the Randos were aware of the FTC’s investigation into Airy and BMS when they bought the tradeline database.

The Commission vote authorizing the staff to file the complaint and request for temporary restraining order was 4-0. The complaint was filed in the U.S. District Court for the Middle District of Florida.

NOTE: The Commission files a complaint when it has “reason to believe” that the named defendants are violating or are about to violate the law and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission has joined the Consumer Financial Protection Bureau in an amicus brief filed with the United States Court of Appeals for the Second Circuit in the case of Sessa v. TransUnion. The brief asks the court to overturn a lower court decision, which held that TransUnion was not liable for failing to investigate a wrongfully reported debt because the inaccuracy was “legal” and not “factual.”

“The lower court’s decision not only disregards the plain language enacted by Congress, but also is a gift to data brokers that already exercise a largely unfettered, invisible power over consumers’ lives,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Consumers can’t vote with their feet when consumer reporting agencies get it wrong. Enforcers and consumers need to be able to hold these companies accountable.”

The lower court held that legal inaccuracies are exempt from the requirement under the Fair Credit Reporting Act that consumer reporting agencies “follow reasonable procedures to assure maximum possible accuracy” of consumer reports. Since this law was enacted, it has allowed enforcers and consumers to hold consumer reporting agencies accountable for the incorrect information they place on consumers’ credit reports. This authority is especially critical in the credit reporting market, where consumers have no options for avoiding credit reporting agencies in order to participate in the economy and there are few incentives to fix sloppy mistakes. This holding, if adopted elsewhere, would make it easier for consumer reporting agencies to escape accountability for sloppy reports that harm consumers.

The joint brief argues that the lower court’s legal inaccuracy exemption is neither based on any textual language in the law, nor is it workable. The invented defense invites consumer reporting agencies and furnishers to skirt their legal obligations by arguing that inaccurate information is only legally, and not factually, inaccurate. For any number of obviously inaccurate factual mistakes that might appear on a consumer’s credit report, consumer reporting agencies might be able to manufacture some supposed legal interpretation to insulate itself from liability. The lower court’s unsupported reading could increase the number of inaccurate credit reports and result in inaccurate information about consumers being conveyed to lenders, landlords, employers, and other entities that purchase consumer reports.

The Commission voted 3-0 to file the amicus brief. Commissioner Noah Joshua Phillips did not participate.

The Federal Trade Commission today took action against apparel company Lions Not Sheep Products, LLC, and its owner Sean Whalen for falsely claiming that its imported apparel is Made in USA. According to the FTC’s complaint, the company added phony Made in USA labels to clothing and accessories imported from China and other countries.  The FTC’s proposed order requires Lions Not Sheep and Whalen to stop making bogus Made in USA claims, come clean about foreign production, and pay a monetary judgment.

“Companies that slap phony Made in USA labels on imported goods are cheating their customers and undercutting honest businesses, and we will hold those companies and their executives accountable for their misconduct,” said Sam Levine, Director of the FTC’s Bureau of Consumer Protection. “American consumers have the right to know the truth about where their clothes and accessories are made.”

Utah-based Lions Not Sheep is an apparel company that sells t-shirts, sweatshirts, jackets, and sweaters on their own website as well as through Amazon and Etsy. The company and its owner Whalen heavily marketed it through social media channels, claiming that it would “show people it’s possible to live your life as a LION, Not a sheep.” Their Made in USA claims online and on product labels included “Made in the USA,” “Made in America,” “Are your products USA Made?” “100% AMERICAN MADE,” and “BEST DAMN AMERICAN MADE GEAR ON THE PLANET.” In most cases, the products advertised using these claims consist of wholly imported shirts and hats with limited finishing work performed in the United States.

 The complaint alleges that on Oct. 8, 2020, Whalen published a video of himself to his social media accounts, with the title MADE IN AMERICA! alongside a Chinese flag. In the video, Whalen said he could conceal the fact that his shirts are made in China by ripping out the origin tags and replacing them with tags stating that the merchandise was made in the United States.

According to the complaint, between May 10, 2021 and Oct. 21, 2021, Whalen and Lions Not Sheep removed tags disclosing that the merchandise was made in a foreign country and printed “Made in USA” at the neck of the shirts, as depicted below:

Enforcement Action

The proposed order settling the FTC’s complaints against Whalen and Lions Not Sheep prohibits the conduct alleged in the complaint. The order requires that Whalen and Lions Not Sheep:

• Pay judgment: They must pay a judgment of $211,335.

• Cease making bogus Made in USA claims: They must stop claiming that products are made in the United States unless they can show that the product’s final assembly or processing—and all significant processing—takes place here and that all or virtually all ingredients or components of the product are made and sourced here. Under the terms of the proposed order, Whalen and Lions Not Sheep are prohibited from labeling products as “Made in USA” unless the final assembly or processing, and all significant processing that goes into the products occur in the United States; and unless all or virtually all ingredients or components of the products are made and sourced in the United States. They must also submit compliance reports.

• Come clean about foreign production: Under the order, any qualified Made in USA claims must include a clear and conspicuous disclosure about the extent to which the product contains foreign parts, ingredients or components, or processing. Finally, to claim that a product is assembled in the United States, Whalen and Lions Not Sheep must ensure that it is last substantially transformed in the United States, its principal assembly takes place in the United States, and U.S. assembly operations are substantial.

The FTC’s Enforcement Policy Statement on U.S. Origin Claims provides further guidance on making non-deceptive “Made in USA” claims.

The Commission vote to issue the complaint and accept the consent agreement was 4-0. The FTC will publish a description of the consent agreement package in the Federal Register soon. Instructions for filing comments appear in the published notice. Comments must be received 30 days after publication in the Federal Register. Once processed, comments will be posted on Regulations.gov.

NOTE: When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $46,517.

Today, Federal Trade Commission Chair Lina M. Khan announced that an open meeting of the Commission will be held virtually on Thursday, May 19, 2022. The open meeting will commence at 1pm ET and will begin with time for members of the public to address the Commission.

The following items will be on the tentative agenda for the May 19 Commission meeting:

Business Before the Commission

• Policy Statement on Education Technology and the Children’s Online Privacy Protection Act: The Commission will vote on a policy statement that announces the agency’s prioritization of the enforcement of COPPA as it applies to the use of education technology. Particularly as the use of education technology has expanded during the COVID-19 pandemic, the statement makes clear that parents and schools must not be required to sign up for surveillance as a condition of access to tools needed to learn.

• Request for Public Comment on Amendments to the Guides Concerning the Use of Endorsements and Testimonials in Advertising: FTC staff will provide a presentation and the Commission will vote on a request for public comment on proposed amendments to the Endorsement Guides. These proposed revisions will address fake reviews and the suppression of negative reviews, among other things, and also update the guidance generally to reflect current advertising realities concerning endorsements.

At the start of the meeting, Chair Khan will offer brief remarks and will then invite members of the public to share feedback on the Commission’s work generally and bring relevant matters to the Commission’s attention. Members of the public must sign up for an opportunity to address the Commission virtually at the May 19 event.

Each commenter will be given two minutes to share their comments. Those who cannot participate during the event may submit written comments or a link to a prerecorded video through a webform. Speaker registration and comment submission will be available through Tuesday, May 17, 2022 at 8 pm ET.

The FTC’s public meeting agendas will be posted on the Commission’s website at least seven days prior to the Commission’s next monthly meeting. A link to the event will be available in advance of the meeting via FTC.gov. The event will be recorded, and the webcast and any related comments will be available on the Commission’s website after the meeting. The Commission retains discretion to make public comments available following the event on ftc.gov. Due to challenges related to the ongoing COVID-19 public health crisis, open meetings will be held virtually until further notice.

Today, the Federal Trade Commission announced it is seeking public comments on proposed updates to the Energy Labeling Rule which will allow consumers to more accurately compare the estimated annual energy consumption appliances before they buy them.

The FTC’s Energy Labeling Rule, issued in 1979 under the Energy Policy and Conservation Act, requires that manufacturers attach labels to major home appliances and other consumer products that help consumers compare the energy usage and costs of competing models. The rule also prohibits retailers from removing or altering these labels.

It also requires Lighting Facts labels or other disclosures for many household appliances. These labels help consumers anticipate their energy costs and avoid costly surprises after a product has already been purchased.

The rule requires the Commission to revise the comparability ranges and associated energy costs every five years for certain EnergyGuide labels. The FTC’s notice of proposed rulemaking seeks comments on scheduled updates to the comparability ranges that were last revised in 2017. These updates focus on three disclosures for most covered products: 1) estimated annual operating cost, 2) a “comparability range” showing the highest and lowest energy consumption or efficiencies for all similar models, and 3) the product’s energy consumption or energy efficiency rating. Details on the specific EnergyGuide label changes can be found in the Federal Register notice.

The Commission vote approving publication of the notice in the Federal Register was 3-1, with Commissioner Christine S. Wilson voting no and issuing a separate dissenting statement.

Once it has been published in the Federal Register, consumers can submit comments electronically. Consumers also may submit comments in writing by following the instructions in the “Supplementary Information” section of the notice.

The Federal Trade Commission has taken action against R360 LLC and its owner, Steven Doumar, for deceiving people seeking help for addiction about the evaluation and selection criteria for the treatment centers in their network. The case is the FTC’s first under the Opioid Addiction Recovery Fraud Prevention Act of 2018.

The agency has secured a $3.8 million civil penalty judgment against the defendants and an order prohibiting them from continuing to make the same kinds of misrepresentations.

“Our order stops R360 and its owner from deceiving people about addiction treatment,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “We’ll continue to use the authority Congress gave us to go after companies that prey on those suffering from addictions.”

The Opioid Addiction Recovery Fraud Prevention Act of 2018 authorizes the Commission to seek civil penalties for unfair or deceptive acts or practices with respect to any substance use disorder treatment service or product. “Substance use disorder treatment services” are services that purport to provide treatment, referrals to treatment, or recovery housing for people with substance use disorders.

According to the FTC’s complaint, Ft. Lauderdale, Fla.-based R360 LLC began promoting its client treatment centers in 2017 to consumers suffering from substance use disorders using television ads for its “R360 Network,” a supposed nationwide network of addiction treatment and recovery specialists. Consumers who called seeking help were routed automatically to a treatment center that was a member of the network.

The FTC alleges that R360 misrepresented to these consumers that it would connect them with treatment centers that met their individualized needs and were selected through a rigorous evaluation process conducted by an expert in substance use disorders and addiction treatment. In reality, Doumar was responsible for assessing the quality of the treatment centers and deciding which would join the network, and he had no educational or professional experience that qualified him to make these decisions. The complaint states he only did a cursory review of potential members and conducted no research to verify the information that treatment center representatives provided to him.

The proposed order settling the FTC’s charges prohibits R360 and Doumar from misrepresenting any material fact about substance use disorder treatment products or services. This includes claims: that consumers will be directed to a treatment center based on their individualized needs; that a product or service has been endorsed or evaluated by an expert; and about the nature of any criteria used to evaluate products or services. The order also imposes a $3.8 million civil penalty against the defendants, which is suspended based on their inability to pay.

The Commission vote approving the complaint and proposed order was 4-0, with Chair Lina M. Khan and Commissioner Christine S. Wilson issuing separate statements. The complaint and order were filed in the U.S. District Court for the Southern District of Florida.