Telemarketer Agrees to Stop Improper Use of Prerecorded Messages

The Federal Trade Commission today announced that a “voice broadcaster” charged with making tens of millions of illegal automated telemarketing calls has agreed to pay a $1 million civil penalty under a settlement reached with the agency and the U.S. Department of Justice (DOJ).

A federal district court action brought by DOJ on behalf of the Commission alleges that the Florida-based telemarketer’s automated phone dialing service called and then illegally hung up on more than 64 million people – and called more than a million numbers that were listed on the National Do Not Call (DNC) Registry. To settle this action, the telemarketer and its owners have agreed to a proposed court order that will prohibit them from making similar calls in the future and require them to pay the $1 million penalty.

According to the Commission, The Broadcast Team (TBT) and its two principals, Robert J. Tuttle and Mark S. Edwards, violated the FTC’s Telemarketing Sales Rule (TSR) in the course of using “voice broadcasting” to call millions of U.S. consumers using automated dialers and prerecorded messages. Many of the numbers TBT called were on the DNC Registry, making the calls themselves unlawful. The FTC also charged that TBT failed to pay for access to the DNC Registry’s numbers in numerous instances.

Furthermore, the FTC alleged that when the calls TBT made were answered by people, instead of voice mail or answering machines, TBT ended the call or hung up after playing a recording. The proposed settlement announced today resolves the civil penalty action brought by DOJ against TBT and its owners based on these alleged “abandoned calls” in which TBT hung-up or played a recording, and violations of the TSR’s Do Not Call provisions.

The Civil Penalty Complaint

At the FTC’s request, in December 2005, the DOJ filed a complaint in federal court alleging that TBT, based in Ormond Beach, Florida, uses “voice broadcasting” to deliver prerecorded telemarketing messages for a variety of clients. The complaint alleged that TBT has the ability to deliver more than a million prerecorded messages per day to answering machines and voice mail services. The complaint charged that in tens of millions of calls that were answered by people rather than answering machines or voice mail services, TBT ended the calls immediately or hung up after playing a recording. The TSR limits telemarketers’ use of recorded messages by requiring that calls answered by a person be connected to a live representative within two seconds. This restriction on “abandoning calls” by hanging up or playing a recording when someone answers applies to telemarketing calls to solicit sales of goods or services, and to calls from for-profit telemarketers soliciting charitable contributions.

According to the complaint, TBT caused more than 64 million calls to be abandoned in telemarketing campaigns on behalf of debt management services-related companies. TBT also abandoned more than 250,000 calls in delivering recordings soliciting ticket sales, and more than 200,000 calls in delivering recordings soliciting charitable contributions. The complaint further alleges that TBT unlawfully called DNC-listed numbers and made calls without paying the required annual fee for access to DNC-registered phone numbers.

The Proposed Final Order

TBT had argued that the TSR did not apply to its delivery of prerecorded messages and should not apply to its plans to use prerecorded messages to solicit funds on behalf of a charity. But in a related case pending in the same court, U.S. District Court Judge Anne Conway rejected TBT’s legal arguments last April. The court ruled that TBT is a required to comply with the TSR, and that exempting TBT from the TSR’s requirements would frustrate the FTC “in achieving its goal of protecting the residential privacy of consumers.” The related case is The Broadcast Team v. Federal Trade Commission, Case No. 6:05-cv-01342-ACC-JGG.

The proposed final order announced today allows the court to require compliance with the TSR by imposing strong injunctive relief against TBT. The proposed order bars the defendants from violating the TSR by hanging up when a person answers or by playing a recorded message instead of connecting the call to a sales person. The proposed order also prohibits TBT and its owners from improperly calling persons on the DNC Registry, or making calls without paying the fees to support the Registry. The proposed order also would impose a civil penalty of $2.8 million against TBT and its owners, of which $1.8 million will be suspended. However, TBT and its owners will become liable for the full amount if the court finds the defendants misrepresented their financial condition or ability to pay.

The Commission vote approving the stipulated final judgment was 5-0. The complaint was filed by DOJ on December 29, 2005, in the U.S. District Court for the Middle District of Florida, Orlando Division and the case is captioned United States v. The Broadcast Team, Inc., et al., No. 6:05-cv-01920-ACC-JGG. The proposed stipulated final judgment was filed with the court on January 26, 2007. The FTC would like to thank the DOJ for its assistance in litigating the case and negotiating the settlement on behalf of U.S. consumers.