In November 2007, the Federal Trade Commission (FTC) reported a sweeping crackdown on several large companies accused of violating the requirements of the National Do Not Call (DNC) Registry, resulting in six settlements collectively imposing nearly $7.7 million in civil penalties. The most notable actions were against adjustable-bed seller Craftmatic Industries and lender Ameriquest Mortgage Co. and involved Internet-based and sweepstakes-based telemarketing lead generation.

Craftmatic Industries was accused of running sweepstakes promotions offering consumers who filled out an entry form the chance to win a prize. The sweepstakes form indicated that the consumers' phone number was also their entry number. Craftmatic allegedly placed tens of thousands of calls to consumers who entered the sweepstakes even though the form did not indicate that by filling it out entrants would receive sales calls, nor did the form contain the consumers' express consent to be called. In settling the complaint, Craftmatic agreed to pay a $4.4 million civil penalty.

ByLaw readers may recall (November 2007 issue) that if you run a sweepstakes and intend to telemarket the participant, at a minimum the form must reflect an expression of interest in your goods or services. Simply entering a sweepstakes does not indicate interest in your products — only in the prize. A statement must be included on the entry form making it clear that the person wants to hear about your products.

Ameriquest's telemarketers were accused of improperly calling consumers on the Registry whose numbers had been obtained from third-party lead generators. The lead generators appear to have enticed consumers to provide contact information, including phone numbers, using Web sites that offered information on financial and other products.

The FTC's complaint against Ameriquest states that because consumers whose numbers were on the lead lists were not contacting Ameriquest in particular, the company hadn't developed an “established business relationship” with them — making calls to them illegal. Also, Ameriquest allegedly ignored consumers' requests to be placed on its entity-specific DNC list. In settling the charges, Ameriquest will pay a $1 million civil penalty.

The penalties in these cases may seem excessive and only applicable to large companies, but each telemarketing violation can result in a fine of up to $11,000. One or two of those could be a hard hit for a small contractor.

—D.S. Berenson is the Washington, D.C., managing partner of Johanson Berenson LLP, a national law firm specializing in the representation of contractors and the home improvement industry (; 703.759.1055). This article is for informational purposes only and should not be construed as legal advice.