Satellite television provider DirecTV has agreed to pay a $5.36 million fine to settle charges by the Federal Trade Commission that it violated the federal Do-Not-Call rule.
The amount represents the largest civil fine ever obtained by the agency in a consumer protection enforcement case. FTC Chairwoman Deborah Platt Majoras announced the settlement at a December 13 press conference. DirecTV, five companies telemarketing on its behalf, and six officers of the telemarketing firms were involved in the case, which Majoras said accounted for 1.4 million complaints, or the single biggest category of do-not-call violations the Commission has ever received.
In a statement, DirecTV said, “DIRECTV wholly supports the national Do-Not-Call Registry and our agreement with the FTC reflects our commitment to prevent unwanted and unlawful telemarketing calls to existing and potential DIRECTV customers. The majority of the complaints the FTC received related to telemarketing calls placed by a small number of former independent retailers, who ignored DIRECTV policies prohibiting unauthorized telemarketing.”
On December 12, 2005, a separate settlement between DirecTV and 22 states over allegedly misleading advertising by the company was announced. Under that settlement, DirecTV agreed to pay $5 million, as well as more clearly explain in ads in those states the restrictions and conditions of its service contracts. According to the states, the settlement amounts will go to restitution to consumers who complained about small, unreadable print in advertisements and the inability to get local channels in their DirecTV service. Customers also complained about the company’s failure to fully explain customers’ obligations until after they signed a contract, being charged a fee for not activating their DirecTV service in a timely manner, and being assessed a fee for terminating service before a free offer period expired.
Before the DirecTV settlement, the biggest fine issued by the FTC over unsolicited calls was a $500,000 penalty against a company called Flagship.
Majoras said the case also invoked a rule against the use of prerecorded messages in place of live sales representatives. Telemarketers are required to have a live sales rep on the line two seconds after the customer answers the phone in at least 97 percent of all calls. At least one company, directly or through a third party, violated this rule, according to Majoras.
The National DNC Registry, in effect since October 2003, now contains more than 110 million phone numbers, and is aimed at preventing unwanted telemarketing calls to consumers who have placed their numbers on the list. An FTC survey supports anecdotal reports that consumers are getting fewer telemarketing calls, with 25 percent of participants surveyed saying they get no telemarketing calls at all now. Majoras confirmed that as more phone numbers are added to the registry, the FTC receives more complaints, currently between 2,000 and 3,000 a day.
Significance: As Majoras said at the press conference, the FTC does not consider it enough to have policies in place that prohibit unauthorized telemarketing. Rather, the FTC warned, it considers a company responsible for violations of the do-not-call rules by contracted telemarketers, if the company fails to properly monitor whether the telemarketers are abiding by the law.