FTC Stays Busy Policing Direct Marketers

The Federal Trade Commission has had a busy week on the direct marketing scene, announcing an assortment of settlements and lawsuits involving spam, misleading advertising, and the Do Not Call registry:

• The FTC charged that Kodak Imaging Network, formerly Ofoto Inc., spammed more than two million recipients with an e-mail that omitted an opt-out mechanism, a disclosure detailing the right to opt-out of further mailings, and a valid physical postal address in violation of the CAN-SPAM Act. The settlement prohibits future violations of CAN-SPAM and imposes a $26,331 fine, representing a full disgorgement of the proceeds from the campaign.
  
• The FTC charged ICE.com with sending more than 6,000 e-mail messages to consumers who had previously requested not to receive messages from the company. Under the settlement, the company will pay a $6,500 fine and will be barred from future violations of CAN-SPAM.
  
• The agency settled allegations against a title company that promised consumers that it maintained “physical, electronic and procedural safeguards” to protect their confidential financial information, when in fact it threw loan applications into a dumpster. The FTC charged Nations Title Agency Inc., Nations Holding Company and Christopher M. Likens with keeping inadequate storage and disposal procedures for sensitive consumer information in violation of federal laws. The settlement bars deceptive claims about privacy and security, and requires the defendants to implement a comprehensive information security program, to be audited by an independent party every two years for 20 years.
  
  The defendants provide a variety of real estate financing services. According to the FTC’s complaint, NHC, NTA, and Likens failed to secure sensitive consumer information on electronic and printed documents. A hacker exploited the failures by using a common Web site attack to gain access to NHC’s computer network, the FTC said. In addition, a Kansas City television station found documents containing sensitive consumer information discarded in NHC’s and NTA’s unsecured dumpster.
  
• Finally, on May 8, 2006, the FTC announced a lawsuit against a mortgage loan telemarketer for calling numbers on the National Do Not Call Registry without identifying itself. The FTC is seeking fines and an injunction against Srikanth Venkataraman and Scorpio Systems Ltd. for violating its Telemarketing Sales Rule. This is the Commission’s first case alleging transmission of false caller ID information. Scorpio allegedly called numbers on the Do Not Call Registry, failed to transmit its telephone number and name to consumers’ caller identification service, and failed to pay the fee required to access the registry.