Strike Two: Alliance Security, a 2014 Order, and a Million More Do Not Call Violations

Round One

Alliance Security Inc. installed home security systems. Back when it was called Versatile Marketing Solutions, Inc., it and its founder and CEO, Jasjit "Jay" Gotra, settled FTC telemarketing and robocall charges in a court order announced in April 2014.

Round Two

On March 22, 2018, the FTC filed a new complaint in the U.S. District Court for the District of Massachusetts (Case No. 1:18-cv-10548). The FTC said Alliance and Gotra never complied with the 2014 order. Since then, according to the FTC, they had made or helped others make at least two million calls that violated the Telemarketing Sales Rule (TSR), including more than a million to numbers on the National Do Not Call (DNC) Registry.

Here's what the FTC complaint laid out:

• Alliance employees made outbound calls selling security systems and monitoring.
• Alliance hired outside telemarketers, including Defend America, LLC and Power Marketing Promotions, LLC, which also called numbers on the Registry.
• Defend America and Power Marketing didn't identify the seller on calls, and the FTC said Alliance told them not to name it.
• Alliance and Power Marketing allegedly claimed to be calling for ADT, an unrelated home security company.
• Even after Alliance learned about the deceptive calls, it didn't end those contracts.
• Alliance and Gotra allegedly pulled consumer credit reports without a permissible purpose, in violation of the Fair Credit Reporting Act (FCRA). The FTC said the improper inquiries were so widespread that the company even tried to get credit reports for Presidents Trump and Obama.

How Each Defendant Ended Up

The telemarketers (2018): Defend America and its principal, Jessica Merrick, were permanently banned from telemarketing with a $2,296,500 civil penalty suspended due to an inability to pay. Power Marketing and its principal, Kevin Klink, were banned from selling home security and medical alert devices. Power Marketing was banned from all telemarketing, and Klink was banned from robocalls and calling numbers on the DNC Registry, unless a consumer directly asks him to call. Their $3,293,512 penalty was partially suspended upon a $300,000 payment.

Alliance (2019): A stipulated order entered on July 31, 2019, permanently banned Alliance from all telemarketing and from obtaining or using credit reports without written authorization. It also imposed a $9,845,021 judgment, suspended based on inability to pay.

Gotra (2020): In May 2020, the FTC announced a final order banning Gotra from nearly all outbound telemarketing, prohibiting FCRA violations, and imposing a $9.85 million civil penalty. He was to pay $88,000 because of his limited financial resources.

What to Steal From This (the Lesson, Not the Leads)

1. Your vendors' calls are your problem. The FTC charged Alliance for calls its authorized telemarketers made.
2. Telling callers to hide your name is a big red flag. Seller identification isn't optional.
3. Don't borrow a famous brand. Claiming to call for ADT got its own count.
4. A court order is a promise. Breaking it turned a settled case into a near total ban.