FTC Secures Record Breaking Settlement for Do-Not-Call Violation

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Today, on the 10 year anniversary of implementing the National Do-Not-Call Registry within the Telemarketing Sales Rule (“TSR”), the Federal Trade Commission (“FTC”) announced its biggest Do-Not-Call related settlement to date: $7.5 million.

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National Do-Not-Call Registry List

Telecommunications

The National Do-Not-Call Registry is managed by the FTC and allows consumers to place their home and mobile telephone numbers on a list that telemarketers are restricted from calling under certain circumstances.  Once a consumer has registered his/her personal number with the FTC, telemarketers have up to 31 days from the date of registration to stop calling the consumer.  Business-to-business calls and faxes are not covered by the National Do-Not-Call Registry.

Moreover, telemarketers are required to review the National Do-Not-Call Registry every 31 days and delete newly registered consumer numbers from their call lists. Phone numbers in the registry may also be shared with law enforcement to assure compliance with federal and state law.

Do-Not-Call Violation Case Details

The alleged violations of the TSR were committed by Mortgage Investors Corporation (“MIC”), which is one of the biggest refinancers of veterans’ home loans in the country.  According to the FTC’s complaint, over 5 million calls were made by MIC to individuals whose phone numbers are listed on the National Do-Not-Call Registry.  Moreover, it was alleged that MIC failed to remove consumers’ phone numbers from its calling list after receiving requests to do so.

This case is also significant due to the fact that it is the first regulatory action enforced by the FTC under the Mortgage Acts and Practices – Advertising Rule (“MAP”), which allows the FTC to collect civil penalties for deceptive mortgage advertising.  Specifically, the FTC complaint alleged that MIC misled veterans to believe that low rate, fixed mortgages were available to them at no cost.  However, when the consumer signed up for the loan, they were surprised to find that they were receiving an adjustable rate mortgage, with payments increasing in conjunction with rising interest rates.  Additionally, the veterans were required to pay the closing costs, which was not adequately disclosed to them.  Lastly, the FTC complaint alleged that MIC misled consumers to believe that it was affiliated with the U.S. Department of Veterans Affairs, which in reality, it had no connection with.

Settlement Terms

In addition to the $75 million civil penalty for violating the FTC and MAP Act, MIC agreed to permanently remove a large number of consumer telephone numbers from its calling list; cease all future misrepresentations of terms related to its services, including mortgage rates, closing costs, interest, and savings; and refrain from misrepresenting its affiliation with any government entity.

If you are interested in learning more about this topic or need to review your advertising or telemarketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney.  Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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David O. Klein

David O. Klein

David Klein is one of the most recognized attorneys in the telemarketing, technology, Internet marketing, sweepstakes and telecommunications fields. Skilled at counseling clients on a broad range of technology-related matters, David Klein has substantial experience in negotiating and drafting complex licensing, marketing and Internet agreements.

(212) 246-0900

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