FTC Announces First Do Not Call Rule Settlements

Two timeshare sellers and their telemarketer will pay more than $500,000 to settle Federal Trade Commission charges that they violated the Do Not Call Rule by calling thousands of consumers who placed their phone numbers on the FTC’s Do Not Call Registry. The Registry currently contains more than 85 million numbers. Under the settlement, the timeshare sellers are barred from violating the Do Not Call Registry in the future. Two individuals who own the telemarketing company that made calls for the timeshare sellers are banned from owning or controlling any telemarketing operation in the future.

“You cannot hire subcontractors to break the law for you and then walk away free of consequences,” said FTC Chairman Deborah Platt Majoras. “Millions of Americans have indicated that they do not want telemarketers calling them, and we intend to enforce the law that gives them the right to make that choice.”

In August 2004, the FTC charged that Braglia Marketing Group (BMG) and its owners, Frank and Kate Braglia, unlawfully called hundreds of thousands of consumers who had placed their numbers on the Registry, and that they had not paid the Registry access fee for some of the area codes they called. The FTC also alleged that the defendants unlawfully abandoned calls to consumers. Under the FTC’s Telemarketing Sales Rule (TSR), a call is “abandoned” if the seller or telemarketer fails to connect the consumer with a live sales agent within two seconds after the consumer answers the phone, resulting in “dead air.” According to the FTC’s complaint, BMG made calls on behalf of the two timeshare and vacation properties in Atlantic City, New Jersey – Flagship Resort and Atlantic Palace. The FTC sought civil penalties and a permanent order prohibiting BMG and the Braglias from violating the law.

After further investigation, the FTC filed a second lawsuit charging Flagship Resort and Atlantic Palace with hiring BMG to telemarket their timeshares, and that while calling on their behalf, BMG violated federal law by calling registered numbers. The complaint further charges that Flagship Resort itself called consumers who were protected by the Registry. The FTC’s complaint also charges that the defendants abandoned calls to consumers and failed to pay required fees to access the Registry.

The settlement with BMG and the Braglias permanently bans the defendants from
(1) owning more than five percent of a telemarketing operation; (2) directing a telemarketing operation; and (3) assuming responsibility for TSR (and Do Not Call) compliance for a telemarketing operation. It also requires them to pay more than $526,000 in civil penalties, but that amount is reduced to $3,500 based upon their demonstrated inability to pay. If it is found that any defendant misrepresented his or her financial situation, the FTC can return to court to seek additional penalties.

The settlement with Flagship Resort and Atlantic Palace requires those defendants to pay a $500,000 civil penalty. The settlements in both cases additionally prohibit the defendants from: (1) calling a consumer whose number appears on the Registry without the consumer’s express approval or an established business relationship with the consumer; (2) abandoning any call to a consumer without employing technology that ensures that no more than three percent of answered calls per day fail to be connected to a live representative and that, for those calls, a recorded message is promptly played; and (3) placing any call to a number within a given area code without first purchasing the appropriate segment of the Registry. Both settlements also contain standard recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance.

Consumers who have placed their telephone numbers on the Registry may file a Do Not Call complaint with the FTC by calling 1-888-382-1222 or visiting www.donotcall.gov. They must provide the date of the call and the phone number or name of the company that called. Consumers may call that same number or visit that same Web site to add a telephone number to the Registry.

The Commission vote authorizing staff to refer the stipulated judgments and orders for permanent injunctions to the Department of Justice for filing was 5-0. The stipulated orders were filed on February 15 (Braglia) and 16 (Flagship). They are subject to court approval.

NOTE: These stipulated judgments are for settlement purposes only and do not constitute an admission by the defendants of any law violation. Stipulated judgments have the force of law when signed by the judge.

Copies of the Commission’s complaints and stipulated orders are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Michael Davis,
Bureau of Consumer Protection
202-326-2458

(FTC File No. X040084 – Braglia)
(FTC File No. 042 3163 – Flagship)