FTC slaps Do Not Call Violators with $1.2 Million in penalties

A federal court today spanked two telemarketers with some $1.2 million in civil penalties for violating the Federal Trade Commission's Do Not Call (DNC) Rule.

According to the FTC, the companies called consumers whose phone numbers were on the Do Not Call Registry without having obtained their express written agreement or having an "established business relationship" with them. One group's telemarketers also allegedly abandoned many calls, by failing to connect the calls to a sales representative within two seconds after consumers answered, as required by law, the FTC stated. The cases were filed by the Department of Justice on behalf of the FTC.

The two court orders settle the FTC's charges against defendants Central Florida Investments, Westgate Resorts, and CFI Sales & Marketing, LLC (collectively known as Westgate by the FTC); and against All In One Vacation Club, Accumen Management Services and their principals (collectively known as the All In One Vacation Club). In addition to imposing the monetary penalties, the orders bar the defendants from violating the Telemarketing Sales Rule (TSR) and its DNC Registry provisions.

According to the FTC's complaint, the Westgate defendants bought phone numbers from an Internet-based lead generator that collected contact information in connection with offering an array of free and discounted products to consumers on its Brandarama.com Web site. The Westgate defendants purchased the telephone numbers of consumers who answered travel-related survey questions, such as "Select your favorite travel destination," on Brandarama.com's online form, the FTC stated. Many of these telephone numbers were on the DNC Registry. The Brandarama.com Web site did not refer to Westgate or notify consumers that they would receive telemarketing calls, except in language buried in its "terms and conditions" or "privacy policy" pages, the FTC stated.

The All In One Vacation Club defendants also sold timeshare and vacation packages through the company's telemarketing unit, All In One. According to the FTC, All In One called many consumers whose numbers were on the DNC Registry. Many of the calls All In One made were to consumers who had filled out entry forms for sweepstakes to win vacation packages and other high-ticket items. While the entry forms had a fine-print waiver on the back that the defendants claimed gave them the right to call consumers on the Registry, the Commission disagreed. In the FTC complaint, the agency stated that the form would not lead a reasonable consumer to expect that by completing it, they would receive a call from the seller about its timeshares and other vacation offerings, and that it did not constitute either "express agreement" or an "established business relationship" under the DNC provisions.

The FTC said that, in both the Westgate and All In One Vacation Club cases, consumers did not reach out to the defendants seeking information about their products or services before receiving a telemarketing call. Thus, the companies did not have an "established business relationship" with the consumers, a component of the DNC.

The Westgate order bars them from violating the terms of the DNC Registry and the TSR, and imposes a civil penalty of $900,000. The All In One Vacation Club defendants are barred from violating the terms of the DNC Registry and the TSR, and imposes a civil penalty of $275,000, the FTC stated.

The FTC recently said its pursuit of DNC violators has been very successful. As of September 30, 2007, the FTC said it had filed 25 cases alleging violations and had reached settlements in 22 of these cases, obtaining injunctive relief in all 22 cases. In 13 of the resolved cases, defendants paid civil penalties totaling more than $8.7 million. In the remaining resolved cases, defendants paid redress for other violations, totaling more than $8.4 million, the FTC said.

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