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The Honolulu Advertiser
Posted on: Saturday, July 16, 2005

Phone marketer approves FTC fine

By Caroline E. Mayer
Washington Post

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WASHINGTON — Columbia House Co., the world's largest direct marketer of CDs, DVDs and other home entertainment, has agreed to pay $300,000 to settle government allegations that it violated the federal do-not-call list.

The payment, announced yesterday by the Federal Trade Commission, is one of a handful of settlements the government has reached with telephone marketers since the anti-telemarketing registry went into effect in October 2003.

More than 97 million phone numbers have been registered, and about 1 million complaints have been filed against telemarketers who have called numbers on the list.

The FTC alleged that Columbia House improperly called tens of thousands of former customers to get them to re-enlist in the company's home-entertainment clubs, in which consumers agree to buy a certain number of items at a discount.

The FTC said these customers had placed their phone numbers in the do-not-call registry and had dropped out of the company's clubs at least 18 months before they were called. Federal rules bar companies from calling a customer whose number is on the list, unless they have had a business relationship with that customer in the previous 1 1/2 years.

The agency also said Columbia House called existing customers, trying to sell additional products or services, although people had specifically told the company they did not want to receive calls.

Columbia House, which has 8 million club members in North America, did not admit any wrongdoing, saying it settled the complaint to avoid the time and expense of litigation. In a statement, the company said that the calls cited by the FTC were made more than 16 months ago and that since then, the company has made "a substantial investment in compliance" to meet the telemarketing rules.

Telemarketers risk fines of up to $11,000 for every number they call on the list, which is jointly enforced by the FTC and Federal Communications Commission.

Lois Greisman, the FTC official who oversees the do-not-call list, said it took more than a year to investigate the Columbia House complaints because the agency had to determine if the company was calling current customers or those who had dropped out of the clubs more than 18 months before the calls. "There is no instant way to make that determination," Greisman said.

The settlement is the latest announced by the FTC. In February, the agency said it would collect more than $500,000 in civil penalties from two time-share companies and the telemarketing firm they hired to market Atlantic City properties, saying the firm rang more than 300,000 telephone numbers on the do-not-call list.

The FCC has issued 20 citations, many to financial institutions, notifying them that they have called several numbers on the registry. These citations carry no financial penalties.

The communications agency has also reached settlements with two telecommunication companies: AT&T Corp. agreed to pay $490,000 to settle charges that it called customers who had specifically asked the company to stop calling, while Primus Telecommunications Group Inc. agreed to pay $400,000 to settle charges that it called numbers on the federal list.