Marking the largest civil penalty the FTC has ever announced in a case enforcing customer protection law, satellite television provider DIRECTV has agreed to pay $5,355,000 to settle FTC charges that, since October 2003, DIRECTV and companies it hired to promote its programming have been violating the Do Not Call provisions of the Commission’s Telemarketing Sales Rule.

At the Commission’s request, the U.S. Department of Justice filed the complaint and stipulated settlements in Federal District Court in Los Angeles. Defendants include DIRECTV, five firms that telemarketed on its behalf, and six principals of those telemarketing firms.

“This multimillion dollar penalty drives home a simple point: Sellers are on the hook for calls placed on their behalf,” said Chairman Deborah Platt Majoras. “The Do Not Call Rule applies to all players in the marketing chain, including retailers and their telemarketers.”

The controversy dates back to 2003 when the FTC began receiving numerous complaints from consumers who alleged that they had received unsolicited telemarketing calls about DIRECTV equipment and service even though they had added their names to the FTC’s national do-not-call registry. The FTC complaint also alleges that one of the telemarketers – Global Satellite, directly or through another entity – abandoned calls to consumers by failing to put a live sales representative on the line within two seconds after the called consumer completes his or her greeting, as required under the law.

According to a statement released by DIRECTV, “DIRECTV wholly supports the national Do-Not-Call Registry and our agreement with the FTC reflects our commitment to prevent unwanted and unlawful telemarketing calls to existing and potential DIRECTV customers.”
The FTC announced proposed stipulated final orders with DIRECTV and two telemarketers, Communications Concepts and its principal and American Communications of the Triad and its principal. The first order requires DIRECTV to pay $5,335,000 in civil penalties. The proposed settlement agreement also prohibits DIRECTV, whether acting directly or through its authorized telemarketers, from violating the TSR.

If adopted by the court, the proposed settlements would end the Commission’s litigation against five defendants including DIRECTV.

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Cindy Waxer is a Toronto-based freelance journalist specializing in business and technology. She has written for publications including TIME, Fortune Small Business, Business 2.0, Computerworld, Canadian Business, and Workforce Management. To see more of her articles, please visit Cindy Waxer’s columnist page.