DirecTV Inc. will pay $5.34 million to settle charges that its telemarketers called households listed on the national do-not-call registry to pitch satellite TV programming, Federal Trade Commission officials said today.
The proposed settlement, if approved by a federal judge in Los Angeles, would be the FTC's largest civil penalty in a consumer protection case. In all 17 previously settled no-call cases, the FTC assessed just $808,500 in penalties.
The DirecTV complaint, filed by the Department of Justice at the FTC's request, named the company and five telemarketing firms it hired, as well as six principals of those firms.
"This multimillion-dollar penalty drives home a simple point: Sellers are on the hook for calls placed on their behalf," FTC Chairwoman Deborah Platt Majoras said in a statement.
DirecTV issued a statement saying it has terminated its relationship with the telemarketing firms that made inappropriate calls and has implemented new procedures to ensure there is no repeat of the violations. The proposed settlement also requires DirecTV to operate a desk to handle complaints stemming from its marketing practices.
"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," said the El Segundo, Calif. company, which has 15 million subscribers.
If the proposed settlement is approved, the FTC said it would end litigation against five defendants, including DirecTV and two of the five telemarketing firms, Communication Concepts and American Communications. The two firms will pay civil penalties of $25,000 and $50,000, respectively.
Litigation continues with seven other defendants in the case.
The complaint alleged that DirecTV and the various telemarketing firms violated do-not-call rules beginning in October 2003, the month the registry debuted. FTC did not have a tally of how many calls were made to households on the list.
"Suffice it to say, it was in the thousands," Majoras said.
The FTC arrived at the $5.34 million penalty by multiplying the $11,000 maximum it can assess per call by the 485 days between the onset of consumer complaints about DirecTV and when the company entered settlement talks, said Allen Hile, acting associate director of marketing practices for the FTC.
The registry, which contains more than 110 million phone numbers, was designed to prevent consumers from receiving unwanted calls from telemarketers. The FTC has received 1.4 million complaints from households on the list, with 2,000 to 3,000 more flooding in each day.
Telemarketers must match their contact lists against the registry every 31 days. Companies that have recently done business with households are exempt, as are charities, pollsters and callers on behalf of politicians.
On Monday, in an unrelated case, DirecTV Inc. promised to reimburse unhappy customers and to make its advertised offers clearer, according to a settlement reached with 22 states over deceptive marketing complaints. The company admitted no wrongdoing in agreeing to repay the states $5 million for the costs of a task force that had tracked consumer complaints about DirecTV contract fees and small print provisions since 2000.
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