Book Club Direct Marketer to Pay $680,000 for Do Not Call Violations

In the most recent case brought against a company for failing to stop calling consumers who asked to be put on the company’s own do not call list, the Federal Trade Commission today announced that book club direct marketer Bookspan will pay a $680,000 civil penalty to settle the Commission’s charges. The Commission also alleged that Bookspan called more than 100,000 consumers on the National Do Not Call (DNC) Registry. The complaint and proposed order were filed in court today by the U.S. Department of Justice on the Commission’s behalf. The FTC alleged that Bookspan, a partnership of Book of the Month Club Holdings, LLC and Doubleday Direct, Inc., called tens of thousands of consumers who previously asked to be put on its own (“entity-specific”) do not call list, and also unlawfully called consumers on the DNC Registry. The court order settling the case bars the company from violating the FTC Act and Telemarketing Sales Rule (TSR) in the future. The DNC Rule is part of the Commission’s TSR provisions.

“The National Do Not Call Registry and company-specific do not call lists give consumers a choice – and a voice – about whether they want telemarketing calls,” said Lydia Parnes, Director of the FTC’s Bureau of Consumer Protection. “When consumers speak, companies must honor their requests. It’s not only good business, it’s also the law.”

Case Background

Bookspan, based in Garden City, New York, is a book seller and telemarketer that initiates outbound calls to consumers in an attempt to sell its products. The company primarily markets and sells its books through subscriptions to book clubs. Consumers who agree to join one of the clubs typically receive several books at a reduced price if they agree up-front to buy additional books later at regular club prices. In its telemarketing calls to members, the company also solicits members to buy additional products or to re-enlist in one of its clubs.

According to the FTC, between October 2003 and August 2004, Bookspan and its telemarketers made more than 100,000 calls to consumers registered on the National DNC Registry. While the DNC Rule exempts calls to consumers with whom a company has an “established business relationship,” the Commission alleges that Bookspan did not have such a relationship with these potential customers.

During the same period, the FTC alleges, Bookspan called tens of thousands of consumers who had requested that they be added to its entity-specific do not call list, including some who were on the DNC Registry. While the company has implemented procedures to ensure it is not calling consumers who specifically asked not to be called, the FTC’s complaint states these procedures did not prevent tens of thousands of phone calls to consumers who had said they did not wish to receive calls made by, or on behalf of, Bookspan.

Terms of the Court Order

The stipulated final order settling the charges against Bookspan prohibits the company from violating the FTC Act and the TSR in connection with its telemarketing campaigns. It also specifically prohibits Bookspan from violations related to the National DNC Registry and requires the company to pay a civil penalty of $680,000. The order also contains standard record-keeping and monitoring terms to ensure Bookspan’s compliance with its terms.

The Commission vote approving the complaint against defendant Bookspan was 4-0. The complaint and stipulated final order were filed by the U.S. Department of Justice on the FTC’s behalf on February 23, 2006, in the U.S. District Court for the Eastern District of New York, and require the signature of the judge.

The FTC’s Bureau of Consumer Protection is committed to ensuring compliance with the National Do Not Call Registry. To date, the Bureau has brought 23 enforcement actions for various DNC-related violations. Consumers can sign up their phone number on the Registry either online at www.donotcall.gov or by calling toll-free 1-888-382-1222 (TTY 1-866-290-4236) from the number they wish to register.

NOTE: Stipulated final judgments are for settlement purposes only and do not 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 the consent order 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. 042-3200)