Telemarketer Penalized $3.4M For Scamming Elderly Into Paying For Unwanted Medical Alert Service

Two years ago, the Federal Trade Commission shut down a Brooklyn-based telemarketing scheme that bullied elderly consumers into paying for a medical alert service they never ordered or wanted. Now a federal court has hit the telemarketer’s repeat-offender operator with a $3.4 million penalty.

Here’s the quick background on this case. Telemarketers for a company called Instant Response Systems would place calls to elderly and infirm consumers, many of them living on fixed incomes (and many of them with numbers on the National Do Not Call registry), falsely claiming they were responding to a request for information placed either by the consumer or a loved one.

The telemarketer would then ask questions about the person’s health and medical care before pitching them on a pricey service ($817 to $1,602) that supposedly provided around-the-clock medical alerts via a pendant worn by the customer.

The company was accused of sending devices and billing customers who never placed an order. Customers who contested the invoices or issued stop-payment orders on checks written to Instant Response were either unable to reach the company or received threatening messages, like the one telling a consumer to “consult an attorney and ask about the criminal and civil consequences of bouncing checks.”

In at least one instance, Instant Response allegedly sent a false police report to a victim, describing the pendant as “stolen property” if it was not paid for immediately.

“There is no genuine dispute that Defendants, in letters and phone calls, made material misrepresentations that consumers ordered medical alert services and owed [Instant Response] money when, in fact, they did not,” reads the summary judgement [PDF].

While the defendant contended that the customers did indeed place these orders and that their complaints to the FTC and others were just “feeble” attempts to get out of paying their bills, the judge notes that the sole piece of evidence provided by the defendant to support this claim was a single written affidavit that was inadmissible as it was not signed under penalty of perjury.

And even if that affidavit were allowed, the judge points out that the woman who wrote it was an independent contractor for Instant Response who “lacks personal knowledge of the consumer complaints or the calls at issue… Her job did not involve communicating with consumers.”

The company didn’t provide any affidavits from the telemarketers who spoke with consumers, nor did Instant Response provide a single recording or transcript of any phone calls with alleged customers, even though the company stated that all calls were recorded.

The court held that the company and its operator had violated the FTC Act, the Telemarketing Sales Rule, and the Unordered Merchandise Statute.

Jason Abraham, the man behind Instant Response, was already subject to a permanent injunction by a federal court in 2003 that banned him from making material misrepresentations in the sale of any goods or services.

“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.”

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