FTC reaches $45.5 million settlement with companies over illegal telemarketing calls

Privacy/Cyber Risk & Data Security FTC DOJ FTC Act Telemarketing Sales Rule Settlement

On March 16, the FTC and three Utah-based movie companies (defendants) agreed to a proposed stipulated final order settling charges that they violated the FTC Act and the Telemarketing Sales Rule (TSR). In 2011, the DOJ filed a complaint on behalf of the FTC, which alleged defendants engaged in abusive telemarketing practices by making more than 117 million deceptive and unlawful calls to consumers to pitch movies and induce DVD sales in violation of the TSR, including 99 million calls to numbers on the Do Not Call Registry. In 2016, a federal court jury found the defendants guilty of six TSR violations and collectively responsible for the more than 117 million unlawful calls alleged in the complaint. The jury additionally found that the defendants had “actual or implied knowledge of the TSR violations,” meaning that the court was allowed to assess civil penalties under the FTC Act. According to the FTC’s press release, this was the first-ever jury verdict in an action to enforce the TSR and DNC Registry rules.

The proposed stipulated final order bans the defendants from engaging in the alleged misconduct, orders the defendants to train and monitor its solicitors to ensure compliance with the TSR, and imposes a $45.5 million civil money penalty, of which $487,735 is suspended unless it is determined that the financial statements defendants submitted to the FTC contain any inaccuracies.