The Federal Communications Commission has proposed a record $225 million fine against two related Houston companies. According to the FTC, the companies made 1 billion robocalls in the first five months of 2019, primarily on behalf of clients that sell short-term, limited-duration health insurance plans. Some of the calls were for extended vehicle warranties.
In a related action, the states of Arkansas, Indiana, Michigan, Missouri, North Carolina, Ohio and Texas have also filed a complaint in the Southern District of Texas against the companies and their owners.
Houston companies, Austin owners
The two Houston companies are Rising Eagle Capital and JSquared Telecom. They are registered to a residential address in NW Houston. The owners of the businesses are John C Spiller, II and Jakob Mears. They live in Austin.
The complaint alleges that Spiller and Mears operated Rising Eagle from January 2018 to January 2020, through which they placed billions of robocalls. On January 2019, they formed a new entity, JSquared Telecom. Spiller and Mears targeted numbers on the national ‘Do not call’ Registry list.
According to the Texas Attorney General, between January and May 2019, they placed 136 million robocalls to Texas residents. Interestingly the complaint filed in court only mentions 328 million robocalls (including the other states) in the first five months of 2019, not the 1 billion mentioned by the FTC. But who’s counting!
The calls would come from a number with the same area code and prefix of the recipient in order to mislead the recipient into believing the call was coming from someone known to the recipient. This practice is called neighborhood spoofing.
FTC collection rate
The FTC appears to have little chance of collecting much of the fine in this case. According to a 2019 Wall Street Journal article, the FTC had levied $208 million in fines against robocallers, but collected only $6,790.