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Unprecedented telemarketing violation case could lead to trillion dollar fine

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SALT LAKE CITY — Three Utah companies await a judge’s decision on how much they’ll have to pay for violating telemarketing laws — and the dollar amount is raising eyebrows.

The case involves three companies: Feature Films for Families, Corporations for Character and Family Films of Utah. It's the first time complaints about the “Do Not Call” registry have gone all the way to a jury trial.

The case started in 2011 and wrapped up with an eight-day trial. The jury gave the Federal Trade Commission (FTC) exactly what they wanted by finding those companies engaged in deceptive and unlawful telemarketing, including making more than 117 million illegal calls to consumers.

The jury verdict covered six different violations, including that the companies’ telemarketers made misleading statements while selling DVDs and also failure to transmit the name of the company to caller IDs.

If the regular fine for all the calls is applied, the damages could reach more than a trillion dollars.

“They will never be able to pay $100 million or a trillion dollars, but perhaps there will be some sort of post judgment settlement under which the FTC gets something to give back to consumers,” said Eric Allen, an attorney for Allen, Mitchell & Allen PLLC, who represent other call centers.

Allen said the case could definitely have a chilling effect on the industry.

“This will be probably a catastrophic event for these companies,” Allen said. “I think we all have to take a hard look at this case and say, ’Look, we need to invest more carefully on the front end on compliance. We need to spend more money, more time, hire more staff — whatever it takes to make sure we are not violating the law.’”

The judge will now need to decide on the dollar amount of the civil penalties.

“In theory, the judge could award the maximum amount and we could have a group of Utah companies — who I feel are good companies — and their individual owner with a judgment in excess of a trillion dollars, something that is not payable,” Allen said.

Contributing: Xoel Cardenas

Ladd Egan

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