FTC Settles Six Cases of DNC Registry Violations

The Federal Trade Commission has settled six cases and levied nearly $7.7 million in fines against companies and individuals accused of violating the requirements of the National Do Not Call (DNC) Registry.

The actions, brought by the Department of Justice on the FTC’s behalf, are against companies ranging from adjustable bed seller Craftmatic Industries Inc. to alarm-monitoring provider ADT Security Services and lender Ameriquest Mortgage Co. They bring to 34 the number of cases filed by the FTC to enforce the DNC Rule

Separately, the Commission said it is working with DOJ to file a complaint against Global Mortgage Funding in U.S. District Court in San Francisco.

In addition to the monetary relief, in each case the FTC has obtained injunctive relief that will prohibit the defendants from engaging in similar Do Not Call violations in the future.

According to the FTC, Craftmatic and three of its subsidiaries worked with defendant Eric Krafstow to 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, the FTC continued.

In addition, the Commission’s complaint charged Craftmatic with placing millions of abandoned calls to consumers. That is, it alleged that 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.

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, according to the FTC.

In telemarketing its services, ADT, Alarm King, and DSS each called consumers whose numbers were on the DNC Registry, charged the Commission.

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.

In the case of Ameriquest, the FTC charged that the company’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, according to the FTC.

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 agreed to pay $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.