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3 Firms to Pay For Illegal Telemarketing

By Caroline E. Mayer
Washington Post Staff Writer
Thursday, February 17, 2005; Page E04

The Federal Trade Commission won more than $500,000 in civil penalties from two time-share companies and the telemarketing firm they hired to market their Atlantic City properties to more than 300,000 telephone numbers on the national do-not-call list.

The penalties, announced yesterday, were the agency's first settlements with companies that violated the government's anti-telemarketing rules, which went into effect nearly 18 months ago. More than 85 million numbers are on the registry and 548,230 complaints have been filed with the FTC by people who said they have received telemarketing calls even though their numbers are on the do-not-call list.

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Under the settlement, the Atlantic City time-share firms -- Flagship Resort Development Corp. and Atlantic Palace Development LLC -- will pay $500,000 for hiring Braglia Marketing Group LLC, the Las Vegas telemarketing firm that made the improper calls. A $526,000 fine was also imposed on the Braglia group and its owners, but that amount was reduced to $3,500 because of "their demonstrated inability to pay," the agency said.

FTC officials said the Braglia group is no longer in the telemarketing business. The settlement bans its owners, Kate and Frank Braglia, from owning or controlling any telemarketing business in the future.

The case was the first in which the FTC sued a company that hired telemarketers. The agency sued the Braglias first in August.

"You cannot hire subcontractors to break the law for you and then walk away free of consequences," said FTC Chairman Deborah Platt Majoras.

The FTC said that Flagship itself also called some of the numbers on the registry. Frank M. Gorman, a Washington lawyer who represented Flagship and Atlantic Palace, said the firms "made a good-faith effort to comply" with the national do-not-call list. "They have now redoubled their efforts -- implementing state-of-the-art technology, hiring a full-time compliance officer, increasing their monitoring of third-party telemarketers, and improving their training -- to prevent unwanted calls to consumers."

Bruce Judd, an attorney for the Braglias, did not return phone calls.

The commission has filed five more cases stemming from violations of the do-not-call list; they are still in litigation. Other cases "are in the pipeline," said Eileen Harrington, the agency's associate director for marketing practices.

The Federal Communications Commission, which also enforces national do-not-call rules, has won two settlements from its investigations. In September, Primus Telecommunications Group Inc. agreed to pay $400,000 for calling numbers on the national do-not-call list. Primus did not admit or deny wrongdoing and attributed the calls to human error. In July, AT&T Corp. agreed to pay $490,000 for violating old rules that required companies to refrain from calling customers who asked that they not be called.

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