The first telemarketers charged with transmitting false Caller IDs (a process known as caller ID spoofing ) to consumers were fined and barred from continuing their schemes by a New Jersey District Court judge.  

Under the terms of a court order announced by the Federal Trade Commission today, two individuals and one corporate defendant have been barred from violating the agency’s Telemarketing Sales Rule (TSR) and its Do Not Call (DNC) requirements arising from a telemarketing scheme designed to sell mortgage loans, refinancing services, and other products to U.S. consumers. They were also found liable for $530,000 in damages.  

In addition to charging the defendants with calling consumers on the National DNC Registry and failing to pay for access to the list, the case was the first brought by the Commission alleging the transmission of phony caller ID information or none at all. Under the DNC provisions of the TSR telemarketers are required to transmit accurate caller ID information so consumers who do not want to be called in the future can contact them and tell them so. 

According to the FTC’s complaint, announced in May 2006, Srikanth Venkataraman, doing business as Scorpio Systems ,  sold mortgage loans, refinancing, and other products and services to customers via outbound telemarketing. Scorpio allegedly called numbers on the Do Not Call Registry, failed to transmit its telephone number and name to consumers’ caller identification service, and failed to pay the fee required to access the Registry. The telemarketer transmitted either no caller ID or a phony caller ID number – 234-567-8923 – and, as a result, consumers were unable to contact the telemarketer to stop unwanted calls. 

The final court order settles the FTC’s charges against defendants Srikanth Venkataraman, Scorpio Systems; Software Transformations; and Sridhar Bhupatiraju, individually and as an officer of Software Transformations. The order prohibits the defendants from violating the TSR in the future, states that they agree not to contest any of the facts alleged in the FTC’s complaint, and are liable for their TSR violations.  

The order imposes suspended civil penalty judgments of $530,000 against each of the individual defendants and $160,000 against the corporate defendant – representing the total gross revenues resulting from their telemarketing violations. Based on the defendants’ inability to pay, however, the order requires Venkataraman to pay $15,000, Bhupatiraju to pay $10,000, and Software Transformations to pay $20,000. It also contains a right to reopen the case if the FTC later finds the defendants have misrepresented their financial condition. 

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