DirecTV To Pay Record $5.3 Million To Settle Telemarketing ChargesDirecTV To Pay Record $5.3 Million To Settle Telemarketing Charges

Satellite television provider DirecTV has agreed to pay $5.3 million to settle charges that it violated federal telemarketing sales rules, the largest civil penalty ever imposed in enforcing a consumer protection law, the Federal Trade Commission said Tuesday.

The Justice Department filed the settlement in U.S. District Court in Los Angeles, which has to approve the deal, the agency said. Along with DirectTV, the Justice Department, at the request of the FTC, also filed with the court settlements with two of the five telemarketing firms also named as defendants in the FTC's original complaint.

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

The do-not-call rule, a component of federal telemarketing sales rules, bars companies and telemarketers from calling people listed on a National DNC Registry. Telemarketers are required to make sure cold-call lists are regularly updated with the registry list.

In a statement, DirecTV blamed rogue telemarketers for the violations.

"The majority of the complaints the FTC received related to telemarketing calls placed by a small number of former independent retailers, who ignored DIRECTV policies prohibiting unauthorized telemarketing," the company said.

The FTC announcement followed by a day a separate announcement that DirecTV had agreed to pay $5 million to settle a 22-state investigation into its marketing and advertising practices.

In the federal case, the FTC charged that telemarketers on behalf of DirecTV, which is controlled by News Corp., called consumers listed on the registry beginning in October 2003, which is when the registry was started. Under the settlement, DirecTV is prohibited from assisting and facilitating any telemarketer it knows or consciously avoids knowing is violating telemarketing sales rules. In addition, the company is required to oversee marketers selling its goods or services.

The two telemarketers listed in the settlement, Communications Concepts and American Communications, are required to pay civil penalties of $25,000 and $50,000, respectively. Litigation against the other defendants is pending.

In the multi-state investigation, which began in March 2003, consumers complained that DirecTV's advertised programs were not always viewable, sports programs offered in packages were sometimes blacked out, local programming was not available as advertised and cancellation policies were unfair. Many customers also complained about poor reception.

During the probe, the state attorneys general raised concerns that small unreadable print in advertisements changed DirecTV's offers and that the company locked consumers into contracts before they full understood their monetary commitments to the company.

Under the settlement, DirecTV agreed to reimburse customers.