The Federal Trade Commission announced on Wednesday a law enforcement crackdown on companies and individuals accused of violating the requirements of the National Do Not Call (DNC) Registry, resulting in six settlements collectively imposing nearly $7.7 million in civil penalties, along with an additional complaint that will be filed in federal district court.
The actions are against adjustable bed seller Craftmatic Industries, Inc. (Craftmatic), alarm-monitoring provider ADT Security Services (ADT), lender Ameriquest Mortgage Company (Ameriquest), and other companies.
The Complaints and Stipulated Orders
Craftmatic. According to the FTC, Craftmatic and three of its subsidiaries run sweepstakes promotions offering consumers who filled out an entry form the chance to win a prize – a Craftmatic bed. The sweepstakes form indicated that the consumers’ telephone number was their entry number as well. Using this information, Craftmatic allegedly placed tens of thousands of calls to consumers who entered the sweepstakes, even though the form did not indicate that by filling it out they would receive sales calls, and the company did not seek their express consent to call them. In addition, the Commission’s complaint charges Craftmatic with placing millions of abandoned calls to consumers. That is, the company did not connect consumers to a live representative within two seconds of when consumers said “hello,” leaving them to find only dead air upon answering. Finally, the FTC alleges Craftmatic ignored consumers’ requests to be placed on the company’s entity-specific do not call list. In settling the complaint, Craftmatic has agreed to pay a $4.4 million civil penalty – the second-largest ever for DNC-related violations.
ADT. The FTC charged ADT and two of its authorized dealers – Alarm King and Direct Security Services (DSS) – with violations similar to those alleged against DirecTV in 2005. ADT marketed its security systems directly to consumers and through authorized dealers, which used a variety of marketing techniques, including telemarketing. In telemarketing its services, ADT, Alarm King, and Direct Security Services each called consumers whose numbers were on the DNC Registry. While the authorized dealers used their own telemarketers, the FTC alleged that ADT is liable both for the sales calls it made, as well as those made by its dealers, to numbers on the Registry. In settling the separate complaints, ADT, Alarm King, and DSS have agreed to pay $2 million, $20,000, and $25,000, respectively.
Ameriquest. According to the complaint, Ameriquest’s telemarketers improperly called consumers on the Registry whose numbers had been obtained from third-party lead-generators. The lead generators enticed consumers to provide their contact information, including phone numbers, using Web sites that offered information on financial and other products. The FTC’s complaint states that because consumers whose numbers were on the lead lists were not reaching out to Ameriquest in particular, the company had not developed an “established business relationship” with them, making calls to registered numbers illegal. Ameriquest also allegedly also ignored consumers’ requests to be placed on its entity-specific do not call list.
In settling the charges, Ameriquest will pay a $1 million civil penalty and is required to ensure that any lead generators it uses disclose to consumers, before they provide their contact information, that they will receive a phone call, the maximum number of sellers who may contact them, and, if possible, the identity of any seller that might call them as a result of their inquiry.
Guardian Communications. The FTC charged Guardian, U.S. Voice Broadcasting with violating the Registry rules related to the use of pre-recorded messages. The complaint alleges that Guardian “blasted” phone numbers with pre-recorded telemarketing pitches, immediately terminating calls when a live consumer answered, leaving “dead air”and giving them no opportunity to ask to be placed on the company’s entity-specific no-call list. The Commission also charged the Guardian defendants with failing to transmit accurate Caller ID information to consumers – instead transmitting the text “Cust Service,” “Services, Inc.,” “Card Services,” “DWC,” or “LTR” as the name of the caller – and placing calls on behalf of sellers that did not pay for access to the Registry. They will pay $150,000 to settle the FTC’s charges, with the remainder of the $7.8 million civil penalty judgment suspended based on their inability to pay.
Global Mortgage Funding. FTC will pursue charges against Global Mortgage Funding for making hundreds of thousands of calls to consumers on the DNC Registry in an attempt to sell financial products. The Commission’s complaint also charges the defendants with failing to transmit the required caller ID information, failing to pay the DNC Registry fees, and abandoning calls by failing to connect consumers to a representative within two seconds after they answered the phone.
Recognizing its importance to consumers, the Commission recently announced that it will not remove telephone numbers from the Registry, pending final Congressional or agency action regarding whether to make registration permanent.
“Consumers have made clear that they greatly value the Do Not Call Registry, and they must be able to depend on its privacy protection,” said FTC Chairman Deborah Platt Majoras. “By bringing enforcement actions, like those announced today, we will ensure that the small number of bad actors pay a price for not adhering to the law and respecting consumers’ privacy requests.”
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