A federal court is compelling the marketer of medical alert devices to pay $3.4 million for using threats and misinformation to scam senior citizens into paying for services they didn't have or want.
At the Federal Trade Commission's (FTC) request, a U.S. district court has prohibited Jason Abraham, a repeat offender, and his company, Brooklyn-based Instant Response Systems (IRS) from calling elderly consumers and bullying and tricking them into paying for unordered medical alert devices.
The court also imposed a $3.4 million judgment against the defendants for their misconduct, which may be used to provide refunds to defrauded consumers.
According to the FTC's complaint, filed in March 2013, telemarketers for IRS called elderly consumers – many of whom are in poor health and rely on others for help with their finances – and pressured them into buying a medical alert service consisting of a pendant that supposedly would allow them to get help during emergencies.
In many cases, IRS falsely claimed during sales calls that consumers had bought the service previously and owed the company hundreds of dollars.
The company shipped fake invoices and unordered medical alert pendants to consumers without their consent, repeatedly threatened them with legal action to coerce them into paying, and subjected them to repeated verbal abuse.
The FTC also charged the defendants with illegally calling consumers whose phone numbers are on the National Do Not Call (DNC) Registry.
The court order issued with the summary judgment announced today imposes both conduct and monetary provisions against Abraham. First, it bars him from violating the FTC Act and the FTC's Telemarketing Sales Rule by making any false and misleading statements to induce consumers to make payments, using threats or intimidation to coerce payment, and from calling consumers whose phone numbers are on the DNC Registry. It also bars him from violating the FTC's Unordered Merchandise Statute. Finally, the court ordered Abraham to pay a judgment of $3,432,462, the amount he received through the scheme.
In its ruling, the court stated, "There is no genuine dispute that [the] defendants, in letters and phone calls, made material misrepresentations that consumers ordered medical alert services and owed IRS money when, in fact, they did not." The court also found that Abraham "knowingly made misrepresentations to hundreds of consumers over a five-year period, all while subject to a permanent injunction issued in 2003 . . . which prohibited him from such conduct."