DirecTV to pay $5.3M penalty
FTC says violation of 'Do Not Call' rule is largest civil assessment ever obtained.
December 13, 2005: 1:02 PM EST

NEW YORK (CNN/Money.com) - Officials announced a $5.34 million settlement Tuesday with satellite TV provider DirecTV over alleged violations of the Do Not Call rule, the largest civil penalty ever obtained by the Federal Trade Commission in a consumer protection enforcement case.

The FTC's action "demonstrates that the registry is a program consumers can continue to believe in," said FTC Chairwoman Deborah Platt Majoras at a press conference held Tuesday morning. "Sellers are on the hook for calls placed on their behalf and for their benefit," she added. "It is not named the Do Not Call Registry for nothing."

DirecTV (down $0.06 to $13.71, Research), five firms telemarketing on the company's behalf, as well as six principals of the telemarketing firms were involved in the case, which Majoras said accounted for the single biggest category of do-not-call violations the commission has ever received.

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In response, DirecTV issued a statement that said, "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."

"The majority of the complaints the FTC received related to telemarketing calls placed by a small number of former independent retailers, who ignored DIRECTV policies prohibiting unauthorized telemarketing," the statement added.

But Majoras was quick to emphasize that the most important part of the settlement is that it sends a warning to companies that they cannot hire telemarketers and then turn their backs on whether or not the rules are followed.

Majoras said the DirecTV case accounted for 1.4 million complaints, the single biggest category of do-not-call violations the commission has ever received.

In one case, DirecTV provided a list of consumers to a telemarketing company, according to Majoras. But in many cases, she said the digital television provider paid a commission to the telemarketing companies for each subscription sold.

The investigation into the case took about two years, according to Majoras. Large numbers of complaints began rolling into the FTC in November 2003

Prior to the DirecTV settlement, the biggest penalty levied over unsolicited calls was a $500,000 penalty against a company called Flagship.

Majoras said the case also highlights a rule against the use of prerecorded messages in place of live sales representatives. Telemarketers are required to have a live sales rep on the line two seconds after the customer completes his greeting in at least 97 percent of all calls.

At least one company, directly or through a third party, violated this rule, according to Majoras.

The National DNC Registry, in effect since October 2003, now contains more than 110 million phone numbers, and is designed to prevent consumers who have registered their number from getting unwanted calls from telemarketers.

A survey conducted by the FTC backs up anecdotal reports that consumers are getting fewer telemarketing calls, with 25 percent of participants surveyed saying that they get no telemarketing calls at all now. And Majoras confirmed that as more phone numbers are added to the registry, the FTC receives more complaints, currently between 2,000 and 3,000 a day.