A Chicago telemarketer who blasted consumers last year with millions of robo-calls pushing auto warranties will pay $2.3 million to settle U.S. Federal Trade Commission charges that he and his two companies allegedly misled consumers, the FTC announced.
The settlement resolves the FTC charges, but isn't an admission of any wrongdoing on the part of Damian Kohlfeld, Voice Foundations LLC and Network Foundations LLC. In total, about $3 million will be collected and used to reimburse consumers. A phone number listed for Kohlfield has been disconnected.
The FTC alleged that Kohlfeld and his two companies made prerecorded calls to consumers, telling them their vehicle warranties were about to expire and trying to get them to buy extended warranties, also known as vehicle service contracts. The calls led consumers into thinking that the callers were connected to car dealerships or manufacturers.
Earlier this year, the FTC settled with two other defendants who helped make the robo-calls, and they have paid more than $655,000. The FTC also settled last September with Transcontinental Warranty Inc., the company that hired Kohlfeld and the others in this case to make the calls.
Under the agreement, Kohlfeld is banned from telemarketing and must liquidate assets including selling a 2006 Mercedes sedan and use the proceeds as part of the restitution. Kelley Blue Book says the value of a middle-of-the-road model Mercedes of that vintage could be worth around $30,000. The settlement was signed by a judge in U.S. District for the Northern District of Illinois on Aug. 19.
Restrictions were placed on automated phone calls last September as a way to rein in the number of sales calls. A consumer has to be told at the beginning of an automated call how to stop future robo-calls and most businesses need written permission before they can call, the FTC says. Some robo-calls are permitted, including those that are informational -- appointment reminders and school opening calls fall under this. Political calls, some calls from health-care providers and businesses calling to collect a debt are also permitted.
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