FTC Wins Its First Telemarketing Sales Rule Jury Verdict | Practical Law

FTC Wins Its First Telemarketing Sales Rule Jury Verdict | Practical Law

A federal jury recently ruled in favor of the Federal Trade Commission (FTC) and found that three Utah based companies violated the Telemarketing Sales Rule (TSR) by making more than 117 million illegal telemarketing calls to consumers. This is the FTC's first jury verdict in an action to enforce the TSR and the agency's Do-Not-Call Registry rules.

FTC Wins Its First Telemarketing Sales Rule Jury Verdict

Practical Law Legal Update w-002-5494 (Approx. 5 pages)

FTC Wins Its First Telemarketing Sales Rule Jury Verdict

by Practical Law Commercial Transactions
Law stated as of 07 Jun 2016 • USA (National/Federal)
A federal jury recently ruled in favor of the Federal Trade Commission (FTC) and found that three Utah based companies violated the Telemarketing Sales Rule (TSR) by making more than 117 million illegal telemarketing calls to consumers. This is the FTC's first jury verdict in an action to enforce the TSR and the agency's Do-Not-Call Registry rules.
The Federal Trade Commission (FTC) recently won its first jury verdict in an action to enforce its Do-Not-Call (DNC) Registry rules under the Telemarketing Sales Rule (TSR). A federal court jury in Utah found that Forrest S. Baker III and three companies that he controlled violated the TSR by making more than 117 million illegal calls to consumers while trying to sell DVDs.
During the short trial, the FTC and the Department of Justice presented evidence that Baker and his companies:
  • Conducted a nationwide calling campaign in which telemarketers offered to send two complimentary DVDs and requested feedback on whether the movies should be part of a list of recommended movies.
  • Called millions of numbers on the FTC's DNC Registry and falsely claimed that all of the proceeds from the sale of their DVDs would be used to complete a recommended viewing list for a nonprofit.
  • Called tens of millions of consumers who had made specific do-not-call requests with Baker's companies.
The federal jury found Baker and his companies responsible for 117 million violations of the TSR. Specifically, the jury found that the defendants, during their national telemarketing campaign:
  • Made false or misleading statements to induce consumers to buy goods or services.
  • Called numbers on the FTC's DNC registry.
  • Called consumers who had previously made specific requests not to receive telemarketing calls from the defendants.
  • Failed to transmit information to caller identification services.
  • Failed to make required oral disclosures.
  • Abandoned calls.
  • Had actual or implied knowledge of all of these violations.
Because the defendants had actual or implied knowledge, the court can assess civil penalties under the Federal Trade Commission Act, which can be up to $16,000 per violation. The court will later determine the exact amount of penalties.
Parties engaged in direct marketing activities, including telemarketing, should carefully review the FTC's advertising rules to ensure that their activities are legal. Otherwise, they can face extensive liability and penalties.
For more information on complying with the TSR, see Practice Notes, Direct Marketing: Telemarketing Sales Rule and Sales Promotions, Contests and Sweepstakes: Telemarketing Sales Rule.