The company settles charges for $5.3 million, the largest-ever Do Not Call payout; the fine underscores the importance of monitoring affiliate marketers.
Posted Dec 14, 2005
DirecTV will pay $5.3 million to settle FTC charges that DirecTV and affiliate marketing companies it hired to promote its programming have been violating the Do Not Call (DNC) provisions of the commission's Telemarketing Sales Rule (TSR) since October 2003. The settlement represents the largest civil penalty the FTC has 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 alleges that telemarketers calling on behalf of DirecTV contacted consumers on the National DNC Registry and it names DirecTV, five firms that telemarketed on its behalf, and six principals of those telemarketing firms.
"We started to get a lot of complaints about these calls, and they were all for DirecTV," says Allen Hile, acting associate director for marketing practices at the Bureau of Consumer Protection. "It got to be one of the largest categories of complaints, so we decided to open an investigation."
The complaint also alleges that one of the telemarketers, Global Satellite, directly or through another entity abandoned calls to consumers by failing to put a live sales rep on the line within two seconds after the consumer completed his greeting, as required by the law. Last, 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. "[Global Satellite] used prerecorded messages, something that's been prohibited by FCC regulations since 1991 to 1992 and now by the FTC's TSR since 2003," Hile says. "Apparently, they were unaware of this even though it's been around for a decade."
As part of the settlement DirecTV will also be "prohibited from assisting and facilitating any telemarketer it knows or consciously avoids knowing is violating the TSR." Hile says that this "helps DirecTV, because they're going to have to exercise control over their distribution network, to make sure calls that are made in their name and for their benefit, will be in accordance with the law."
This a lesson that all large companies that use affiliate marketers can learn from, Hile says. "Just because you're using affiliate marketers doesn't mean you're off the hook. You can't evade your responsibility for complying with the law because you have a loose network of affiliates that are bidding for your benefit. You must have control over it."
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