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SALT LAKE CITY — Federal regulators slapped Utah-based companies that promote family films with a hefty fine for making telephone calls to more than 99 million numbers on the national do not call list and other violations.
A U.S. District Court order prevents Feature Films for Families Inc., Corporations for Character L.C., Family Films of Utah Inc., from engaging in deceptive and abusive telemarketing practices, the U.S. Department of Justice said Monday. The courts imposed a $45.4 million fine but suspended all but $487,735 based on the companies' inability to pay the entire amount.
“Unwanted telemarketing calls invade the privacy of American consumers,” Chad A. Readler, acting assistant attorney general of the Justice Department’s Civil Division said in a statement.
The Department of Justice filed a civil complaint against the companies and its owner, Forrest S. Baker III, alleging widespread violations of the Federal Trade Commission and telemarketing rules in various campaigns to sell DVDs and movie tickets and solicit charitable contributions.
After an eight-day trial in May 2016, a jury found the companies had committed more than 117 million knowing violations of the Telemarketing Sales Rule, including 99 million calls to phone numbers on the do not call registry, and more than 4 million additional calls in which they made misleading statements to induce DVD sales.
The verdict was the first-ever in an action to enforce the Telemarketing Sales Rule and do not call registry rules.
The stipulated final order permanently stops the companies from making misrepresentations or omissions in the marketing entertainment products, services or recordings.
According to the justice department complaint, the companies conducted a nationwide telephone campaign under the name Kids First, in which they offered to send two complimentary DVDs and requested feedback on whether the movies should be included on a list of recommended films. However, the telemarketers did not disclose that those who agreed to participate would later receive calls pitching DVDs produced by the companies.
The telemarketers allegedly told consumers that “all of the proceeds of this fundraiser will help us finish up creating this recommended viewing list to help parents and grandparents, like us, with a list we can trust," the Department of Justice alleged.
In fact, the organization responsible for the Kids First recommended viewing list — the Coalition for Quality Children’s Media — did not receive all the proceeds. The complaint alleges that the three companies received at least 93 percent of the DVD sales.
