Six companies have settled charges that they called phone numbers on the National Do Not Call list, the Federal Trade Commission (FTC) announced on November 7, 2007. The companies include Ameriquest Mortgage Company,Craftmatic Industries, Inc., ADT Security Services, Alarm King, Direct Security Services and Guardian Communications. Clayton Friedman, a partner at Manatt, represented Ameriquest in the matter.
The FTC alleged that Ameriquest’s telemarketers improperly called consumers on the registry whose numbers had been obtained from third-party lead-generators. Although the consumers had provided their contact information, including phone numbers, to the lead generators for purposes of seeking mortgage rates and information, the FTC asserted that calls to these consumers were improper because they had not reached out to Ameriquest in particular. Specifically, the FTC’s complaint contends that Ameriquest did not have an “established business relationship” with these consumers that would have permitted the company to call consumers whose numbers are listed on the registry.
In guiding this matter to a favorable settlement for the company, Friedman helped establish a safe harbor for companies using leads generated by third-party vendors. Companies wishing to make use of the safe harbor articulated by the FTC’s settlement with Ameriquest should ensure that their third-party lead vendors disclose to consumers, before the consumers provide their contact information, that they will receive a phone call from sellers, 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.
Of the other settling companies, the biggest fine – $4.4 million – will be paid by the adjustable bed maker Craftmatic Industries, Inc. The FTC accused Craftmatic and three subsidiaries of using phone numbers provided by entrants in a sweepstakes for a Craftmatic bed to later make sales calls to those entrants even though their numbers were on the Do Not Call list.
ADT and two of its dealers, Alarm King and Direct Security Services, which collectively will pay a $2 million fine, were accused by the agency of directly marketing security systems to consumers who had placed their numbers on the list.
The last settlement involved Guardian Communications of Moline, Illinois, which the FTC accused of “blasting” millions of calls to phone numbers on the registry with pre-recorded telemarketing pitches. Guardian will pay $150,000 to settle the charges, the commission said.
The registry forbids telemarketing calls to phone numbers on the list. Companies face fines of up to $11,000 for each violation. Groups engaged in charitable, political or survey work are exempt. Companies that have an established business relationship with a customer also may call for up to 18 months after the last purchase, payment or delivery, or up to 3 months after an inquiry.
The latest enforcement brings to 34 the number of Do Not Call cases the government has filed against companies since the registry was launched in June 2003.
At the news conference announcing the settlements, FTC Chair Deborah Majoras reiterated that the agency no longer plans to automatically purge phone numbers on the registry that begin expiring next summer. Each number on the registry was originally good for five years and then would have to be re-registered by the consumer. The agency decided to reverse course last month, however, as Congress considers legislation that will make the phone numbers on the Do Not Call list permanent.