US Department of Justice has filed a complaint that charges three Utah-based firms and their owner with waging deceptive and illegal telemarketing campaigns. The complaint has been filed at the request of the Federal Trade Commission that charges them of illegal telemarketing campaigns pitching movies and soliciting for donations, including calls to more than 16 million phone numbers on the National Do Not Call Registry. The FTC charged that the companies and their owner, Forrest S Baker III, committed multiple violations of the FTC Act and the Telemarketing Sales Rule, and deceived customers about where the proceeds from their purchases and their donations would go. According to the FTC's complaint, Baker controls a group of Utah-based companies that produces and markets films and DVDs and solicit charitable contributions from consumers nationwide, including Feature Films for Families, Corporations for Character, and Family Films of Utah. The complaint states that in 2008 and 2009 the defendants conducted a nationwide calling 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 movies. However, the defendants did not disclose that consumers who agreed to participate would later receive calls pitching DVDs produced by the defendants. Moreover, the defendants' telemarketers allegedly told consumers that 'all of the proceeds of this fundraiser will enable to finish up creating the recommended viewing list.' In fact, the organisation 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 defendants received at least 93 percent of the DVD sales proceeds. The FTC also alleges that, between 2009 and 2010, the defendants conducted fundraising campaigns for organisations with names related to fraternal orders of police (FOPs) and firefighters. The defendants receive most of the donations raised by these campaigns, and the organisations retain only 15 to 33 percent.
The commission alleges that, in order to persuade donors to give money, the defendants made multiple false and misleading misrepresentations about the nature or purpose of the organisations for which the defendants requested donations, the way in which charitable contributions will be used, and the percentage or amount of any charitable contribution that will go to an organisation. The FTC’s complaint also alleges that the defendants have repeatedly called numbers on the National Do Not Call Registry in their telemarketing campaigns. In calls made under the name Kids First, the FTC alleges, the defendants made more than five million calls to consumers whose numbers were on the Registry. The complaint further charges that, since June 2007 the defendants have made approximately nine million additional illegal telemarketing calls to phone numbers that are on the Do Not Call Registry to sell Feature Films for Families DVDs. The FTC alleges that in another calling campaign in 2009, the defendants called consumers to urge them to buy tickets to see ‘The Velveteen Rabbit,’ a film produced by Baker and released in theatres before going to DVD. The FTC complaint alleges that the defendants’ telemarketers made no effort to avoid calling consumers on the Do Not Call Registry. During this two-week campaign, the defendants called more than two and a half million consumers whose numbers were on the Do Not Call Registry. In addition, the complaint charges that the defendants violated the Telemarketing Sales Rule. The commission’s vote referring the complaint to the Department of Justice was 5-0. The complaint was filed in the US District Court for the District for the Northern District of Florida. The complaint, filed by the Department of Justice at the request of the FTC, seeks a court order to permanently bar the defendants from violating the FTC Act and the Telemarketing Sales Rule, as well as civil penalties, and disgorgement of their ill-gotten gains.