Markets Wired

Under two court orders entered by a federal district court, two groups of vacation and timeshare companies will pay a total of almost $1.2 million for violating the Federal Trade Commission’s Do Not Call (DNC) Rule. The cases were filed by the Department of Justice on behalf of the FTC. According to the FTC, the companies called consumers whose phone numbers were on the Do Not Call Registry without having obtained their express written agreement or having an “established business relationship” with them. One group’s telemarketers also allegedly abandoned many calls, by failing to connect the calls to a sales representative within two seconds after consumers answered, as required by law.

The two court orders announced today settle the FTC’s charges against defendants Central Florida Investments, Inc., Westgate Resorts, Ltd., and CFI Sales & Marketing, LLC (collectively, the Westgate defendants); and against All In One Vacation Club, LLC, Accumen Management Services, Inc., and their principals (collectively, the All In One Vacation Club defendants). In addition to imposing the monetary penalties, the orders bar the defendants from violating the Telemarketing Sales Rule (TSR) and its DNC Registry provisions.

According to the FTC’s complaint against the Westgate defendants, those companies use outbound telemarketing to sell timeshares and vacations at timeshare resorts to consumers nationwide. The Westgate defendants bought phone numbers from an Internet-based lead generator that collected contact information in connection with offering an array of free and discounted products to consumers on its Brandarama.com Web site. The Westgate defendants purchased the telephone numbers of consumers who answered travel-related survey questions, such as “Select your favorite travel destination,” on Brandarama.com’s online form. Many of these telephone numbers were on the DNC Registry. The Brandarama.com Web site did not refer to Westgate or notify consumers that they would receive telemarketing calls, except in language buried in its “terms and conditions” or “privacy policy” pages.

The All In One Vacation Club defendants also sold timeshare and vacation packages through the company’s telemarketing unit, All In One. According to the Commission, All In One called many consumers whose numbers were on the DNC Registry. Many of the calls All In One made were to consumers who had filled out entry forms for sweepstakes to win vacation packages and other high-ticket items. While the entry forms had a fine-print waiver on the back that the defendants claimed gave them the right to call consumers on the Registry, the Commission disagreed. In the complaint, the agency stated that the form would not lead a reasonable consumer to expect that by completing it, they would receive a call from the seller about its timeshares and other vacation offerings, and that it did not constitute either “express agreement” or an “established business relationship” under the DNC provisions.

In addition to calling phone numbers on the Registry, the FTC charged the All In One Vacation Club defendants with violating the abandoned call provisions of the TSR by failing to connect calls answered by consumers to a sales representative within two seconds of when the consumers completed their greetings.

The FTC contends that, in both the Westgate and All In One Vacation Club cases, consumers did not reach out to the defendants seeking information about their products or services before receiving a telemarketing call. Thus, the companies did not have an “established business relationship” with the consumers. Moreover, consumers had not given the defendants permission to call. Without consumers’ express written agreement and without an “established business relationship” with them, making telemarketing calls to registered numbers is illegal.

The Westgate order bars them from violating the terms of the DNC Registry and the TSR, and imposes a civil penalty of $900,000. The All In One Vacation Club defendants are barred from violating the terms of the DNC Registry and the TSR, and imposes a civil penalty of $275,000. Both orders also contain record keeping and other provisions to ensure that the defendants comply with their terms.

The final court orders announced today settle the Commission’s charges against the following Florida-based defendants: 1) Central Florida Investments, Inc.; 2) Westgate Resorts, Ltd.; 3) CFI Sales & Marketing, L.L.C.; 4) All In One Vacation Club, L.L.C., d/b/a All In One Vacations and Vacation Station, Inc.; 5) Accumen Management Services, Inc.; 6) Larry Coltelli, individually and as an officer or director of All In One Vacation Club, L.L.C. and Accumen Management Services; and 7) Steve Schlossberg, individually and doing business as an officer or director of All In One Vacation Club, L.L.C. and Accumen Management Services.

The Commission vote authorizing the filing of the complaints and stipulated final orders in consent of the court actions was 4-0 in each case. The DOJ filed the complaints and final orders on behalf of the FTC in the U.S. District Court for the Middle District of Florida, Orlando Division, on January 15, 2009, and they have now been entered by the court.

NOTE: The Commission issues or files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the named parties have violated the law. These stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. The stipulated final orders require approval by the court and have the force of law when signed by the judge.

Copies of the complaints and stipulated final orders are available from the FTC’s Web site at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Westgate.wpd)
(FTC File Nos. 062-3123, Westgate Resorts and 072-3047, All In One Vacation Club;
U.S. Dist. Ct. for the Middle District of Florida, Civ. Nos. 6:09-cv-104-Orl-19GJX (Westgate) and 6:09-cv-103-Orl-31DAB (All In One)).