Last week, the Arizona Attorney General filed a complaint against telemarketer Valley Delivery LLC and affiliated companies Next Day Delivery LLC and My Home Services LLC, and an individual defendant, Mathew Willes, for allegedly distributing fake missed package slips to homeowners to collect their personal information in a “delivery slip scheme.” While the conduct here seems particularly egregious, the case serves as a good reminder that the State AGs remain focused on consumer protection issues especially involving personal data and telemarketing.

The complaint alleged that since January 2017, Valley Delivery gathered new homeowners’ addresses from the county recorder’s office and then dispatched “delivery drivers” to those addresses to post fake delivery slips, with the caption “Sorry We Missed You” on the door of each home. The delivery slips contained a callback telephone number, purportedly for consumers to reschedule the delivery. However, when consumers dialed the callback number on the slips, representatives allegedly collected consumers’ information for telemarketing purposes by affiliated companies and third parties. In addition, according to the complaint, the defendants created websites with false information about the company meant to induce consumers to contact the companies about their “missed delivery.” The defendants allegedly failed to provide sufficient disclosure to consumers concerning their business practices, both on the companies’ websites and on the delivery slips themselves. Even though, there was a purported disclaimer on the back of the slip that any contact information customers provide may be used by the companies or any of its partners for marketing purposes, many homeowners did not see this less conspicuous language placed in a smaller font than the language on the front of the slip.

According to the complaint, the defendants never delivered any packages for consumers or received any payment from customers for shipping packages. Rather, the companies only received payments from collecting homeowners’ phone numbers for marketing purposes, including to target new homeowners with goods and services such as air conditioners, home security systems and water heaters. Thus, the attorney general alleged that the defendants violated the Arizona Consumer Fraud Act by misrepresenting to consumers that there was a missed delivery in order to obtain the consumers’ personal information, created and maintained deceptive and misleading websites meant to induce consumers to contact the companies about their “missed delivery.

This is not the first legal challenge that defendant Willes has faced in Arizona. In 2012, the Arizona attorney general investigated another one of Willes’ businesses, which allegedly operated using fake delivery slips to collect and sell consumer information. In 2013, the state settled with the company, entering an order enjoining the company from misrepresenting to consumers that they are attempting or have attempted to deliver a package to the consumer. The complaint against Valley Delivery alleges that the defendants violated the previous consent decree.

This scheme is both ingenious and audacious, and it follows the market. More and more commerce is fulfilled by home-delivery. The enforcement action provides a strong reminder that law enforcement also follows the market. Here, the alleged fraud involved solely the lead generation not the sale of the underlying products sold in the telemarketing. Nevertheless, the AG is seeking the proceeds of the underlying sales plus civil penalties.