One of the telemarketers responsible for millions of illegal auto warranty robocalls to consumers last year will pay approximately $2.3 million, give up his Mercedes and be barred from telemarketing, under a settlement with the Federal Trade Commission. The settlement concludes the FTC's case against the operation.

The FTC had charged Damian Kohlfeld and his two firms with making millions of illegal prerecorded calls to consumers nationwide in an attempt to get them to buying extended auto warranties or service contracts. The robocalls misled consumers into thinking that the callers were affiliated with consumers’ car dealerships or manufacturers, and that their auto warranty was expiring or about to expire.

Earlier this year, the FTC announced a settlement with two other defendants who helped make the robocalls, under which they have paid more than $655,000. The FTC also announced a settlement in September 2009 with Transcontinental Warranty Inc, the company that employed the defendants in this case to make the illegal prerecorded calls. 

According to the FTC’s complaint, Kohlfeld and the Chicago-based firms Voice Foundations LLC, and Network Foundations LLC, violated the FTC’s Do Not Call Registry and falsely represented that: the telemarketers were calling from, or affiliated with, the manufacturer or dealer of the consumer’s automobile; the consumer’s original automobile warranty was about to expire; and the telemarketer had specific information about whether the consumer’s vehicle was the subject of a recall.

Along with the nearly $2.3 million, the settlement requires Kohlfeld to liquidate two investment accounts totaling approximately $130,000 and sell his 2006 Mercedes. All of the money collected will be used for consumer redress.

The settlement order bans Kohlfeld from telemarketing or assisting others engaged in telemarketing, prevents him from making the misrepresentations alleged in the FTC’s complaint, and bars him from making any misrepresentations related to the sale of any goods or services. The order specifically prohibits him from misrepresenting the cost, use or effectiveness of any product or service or any of the refund policies associated with any product or services.

Finally, Network Foundations will pay $50,000 to be used for consumer redress. Voice Foundations has no assets to pay toward a judgment. If either of the companies later is found to have misrepresented its financial condition, it will be subject to a larger monetary judgment.

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