United States: FTC And Florida Attorney General Settlement Cripples Medical Alert Device Company

On November 13, 2014, the United States District Court for the Middle District of Florida approved and entered a permanent injunction and settlement between the Federal Trade Commission ("FTC") and the Florida Attorney General (the "AG"), on the one hand, and Woldwide Info Services, Inc. ("Worldwide"), on the other.  The settlement effectively ends the medical alert device business of Worldwide and its principals.  The settlement is the result of a lawsuit filed by the FTC and the AG in January alleging that Worldwide and its principals fraudulently marketed their devices to seniors in the State of Florida.  The settlement imposes sweeping restrictions on Worldwide and its principals, forbidding them from, among other things, making any robocalls or performing any telemarketing campaigns in the future.

FTC Allegations

According to the complaint, Worldwide and its related entities used pre-recorded messages to robocall senior citizens.  The calls informed consumers that medical alert devices had been purchased for consumers by friends or relatives, and that the shipping costs were prepaid.  The callers were asked to press a number on their telephones to speak with a live agent to schedule delivery.  Thereafter, consumers would be directed to a live operator who, toward the end of the call, would inform consumers that the medical alert service came with a monthly monitoring fee.  To cover the fee, consumers were asked to provide a credit card or bank account information.  Although assured that their accounts would not be charged until the device was received, for many consumers Worldwide would process the monitoring fee on the same day of the call.  The FTC alleged that Worldwide's business practices violated the FTC Act, the Telemarketing Sales Rule and the Florida Deceptive and Unfair Trade Practices Act, as well as other common law rules.

The FTC Settlement

Pursuant to the terms of the settlement, Worldwide, its related entities, and its principals, are all banned from placing any robocalls or participating in any telemarketing campaign in the future.  Additionally, Worldwide, its related entities and its principals are banned from ever selling, advertising, marketing or promoting medical alert products or services.  A judgment has been entered against the settling defendants for $22,989,609.00, however all but $24,000 of the judgment has been suspended.  The principals have also agreed to sell personal property, such as cars and a boat, with the proceeds to be paid to the FTC.

Protect Yourself

As we have previously noted, the FTC has been increasingly vigilant in pursuing marketers that use deceptive advertising and robocalling in connection with their respective businesses.  The settlement reached with Worldwide demonstrates that business owners risk not only money damages, but also the loss of personal property and possibly the very existence of the business if they run afoul of telemarketing and deceptive advertising laws.

If you are interested in learning more about this topic, or if you have been served with legal process relating to your marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

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