One of the most important trials in recent history wound up last month–and it happened right under our noses. A Utah jury found that a film producer had engaged in massive violations of federal telemarketing rules, including a staggering number of calls to numbers on the Do Not Call Registry. Now, this bottom-feeder is staring down the barrel of up to a trillion dollars in fines.
The case began in 2011, when the Federal Trade Commission sued film distributor Feature Films for Families, telemarketer Corporations for Character, and parent company Family Films of Utah-for waging highly deceptive telemarketing campaigns. Read the complaint here. All three companies are controlled by Forrest Baker, who was also named as a defendant. He is the first telemarketer to face a jury trial for Do Not Call violations.
In 2008 and 2009, Corporations for Character conducted a telephone campaign called “Kids First,” which appeared to be a fundraiser on behalf of the Coalition for Quality Children’s Media. Corporations for Character offered to send two complementary DVDs produced by Feature Films for Families and asked customers to let them know if the films should appear on a list of recommended films for families generated by the Coalition for Quality Children’s Media. What customers didn’t know, however, was that if they took part, they would receive additional calls pitching DVDs produced by Feature Films for Families. They also didn’t know that as much as 93 percent of the proceeds went into Baker’s pocket.
In 2009, Feature Films for Families released an adaptation of “The Velveteen Rabbit,” and called eight million people urging them to buy tickets for the movie before it went to DVD. In the process, they called some 2.5 million numbers listed on the Do Not Call Registry. Indeed, they didn’t even try to avoid calling numbers on the registry.
The FTC accused Baker and his companies of openly flouting its rules governing telemarketing. In addition to rampant Do Not Call violations, his companies repeatedly called people who said they didn’t want to be called again. They also didn’t properly identify themselves on Caller ID devices, didn’t state the purpose of the call or the nature of the goods being sold, and hung up on people who demanded to talk to someone with a pulse.
The case went to trial in May. The FTC received a significant boost in March 2015, when federal judge Robert Shelby ruled that calls billed by the Baker companies as surveys and fundraisers were actually illegal telemarketing. It proved to be a harbinger of the jury’s verdict on May 25. The jury found that the Baker companies had made over 117 million illegal calls, including a whopping 99 million Do Not Call violations.
More seriously, the jury found that Baker and his companies were well aware of these violations, allowing Shelby to fine them up to $17,000 per violation–the maximum fine available under law. If Shelby imposes the maximum for each call, Baker and his companies will have to cough up a whopping $1.8 trillion. Needless to say, it could potentially be the financial equivalent of a death sentence.
However, looking at Baker’s past history, he probably needs to be driven out of business. Earlier in the millennium, he conspired with the Dove Foundation to sell movies over the phone, using Dove’s nonprofit status to do an end run around federal and state Do Not Call lists. Missouri officials caught and sued them in 2006, and in 2009 Baker and Dove agreed to pay $70,000 to settle the suit. In 2009, Verizon Wireless sued Feature Films for bombarding its customers with telemarketing calls about “The Velveteen Rabbit”; Baker settled a month later for $25,000. Clearly, he didn’t get the hint.
Eric Allen, an attorney who represents telemarketers who actually follow the law (yes, they exist), told KSL-TV in Salt Lake City that any fine greater than $100 million will be well beyond what Baker can ever pay. He believes there will ultimately be a settlement which ensures customers who had to endure these calls will get some compensation. In the long run, however, Allen believes this case will send a message to the telemarketing industry that it will need to pump more resources into ensuring that it acts within the law.
It shouldn’t have even gotten to this point, however. You would think that given telemarketing’s dicey reputation, it wouldn’t take a major lawsuit to get companies to comply. If the prospect of a trillion-dollar fine doesn’t get the industry’s attention, nothing will.
