DIRECTV to Pay $5.3 Million Penalty For Do Not Call Violations

Satellite television provider DIRECTV will pay $5,335,000 to settle FTC charges that, since October 2003, DIRECTV and companies it hired to promote DIRECTV programming have been violating the Do Not Call (DNC) provisions of the Commission’s Telemarketing Sales Rule (TSR). This is the largest civil penalty the FTC has ever announced in a case enforcing any consumer protection law.

At the Commission’s request, the U.S. Department of Justice (DOJ) filed the complaint and stipulated settlements in Federal District Court in Los Angeles. The complaint names as defendants DIRECTV, five firms that telemarketed on its behalf, and six principals of those telemarketing firms. Settlements with DIRECTV and two of the telemarketing firms and their principals were filed along with the complaint.

“This multimillion dollar penalty drives home a simple point: Sellers are on the hook for calls placed on their behalf,” said Chairman Deborah Platt Majoras. “The Do Not Call Rule applies to all players in the marketing chain, including retailers and their telemarketers.”

The Complaint

The complaint alleges that telemarketers calling on behalf of DIRECTV contacted consumers on the National DNC Registry. In addition, the complaint alleges that one of the telemarketers – Global Satellite, directly or through another entity – abandoned calls to consumers by failing to put a live sales representative on the line within two seconds after the called consumer completes his or her greeting, as required under the law.

Finally, the complaint alleges that DIRECTV provided substantial assistance and support to Global Satellite, even though it knew or consciously avoided knowing, that Global Satellite was violating the TSR.

Terms of the Court Orders

The FTC announced proposed stipulated final orders with DIRECTV and two telemarketers, Communications Concepts and its principal and American Communications of the Triad and its principal.

The first order requires DIRECTV to pay $5,335,000 in civil penalties. The proposed settlement agreement also prohibits DIRECTV, whether acting directly or through its authorized telemarketers, from violating the TSR. The proposed settlement tracks the relevant Telemarketing Sales Rule provisions, prohibiting calls to consumers on the DNC Registry, calls to consumers who asked not to receive calls on behalf of a particular seller, and abandoned calls.

The proposed settlement also requires DIRECTV to terminate any marketer of its products who DIRECTV knows or should know is making cold calls to consumers without express, written authorization from DIRECTV. The proposed settlement also prohibits DIRECTV from assisting and facilitating any telemarketer it knows or consciously avoids knowing is violating the Telemarketing Sales Rule. Finally, the proposed settlement imposes extensive monitoring requirements on DIRECTV mandating that the company oversee those marketers selling its goods or services.

The orders against Communication Concepts and American Communications require the companies to pay civil penalties of $25,000 and $50,000, respectively and bar both companies and their principals from future violations of the TSR and its component DNC Rule. The orders contain judgments of $205,000 against Communications Concepts and $746,300 against American Communications, both which have been suspended based on those companies’ inability to pay.

Settling Defendants and Ongoing Litigation

The proposed settlements announced today, if adopted by the court, would settle the Commission’s complaint and end its litigation against the following five defendants: DIRECTV, Inc.; Communication Concepts, LLC, also doing business as (dba) Rogers Group; Jim Turner, individually and as an officer of Communication Concepts; American Communications of the Triad; and Michael Gibson, individually and as an officer of American Communications of the Triad.

Litigation continues with the following seven defendants: D.R.D., Inc., also dba Power Direct; Daniel R. Delfino, individually and as an officer of D.R.D.; Nomrah Records, also dba Direct Activation; Mark Harmon, individually and as an officer of Nomrah Records; Global Satellite, LLC., also dba Mavcomm; William King, individually and as an officer of Global Satellite; and Michael Gleason, individually and as an officer of Global Satellite.

The Commission vote approving the complaint against DIRECTV and the five corporate defendants and their principals was 4-0, as was the vote to approve the stipulated final orders against DIRECTV and the two corporate defendants and their principals. The complaint and stipulated final orders were filed by the DOJ on the FTC’s behalf on December 12, 2005, in the U.S. District Court for the Central District of California, Western Division.

NOTE: Stipulated final judgments are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated judgments have the force of law when signed by the judge.

Copies of the complaint and three consent orders in settlement of the court action are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 042-3039; Civ. No. SA CV 05-1211 (DOC))