Calif A.G. Obtains Judgment in First ‘Do Not Call’ Lawsuit Filed in Nation

June 30, 2004

California Attorney General Bill Lockyer has reached a settlement in what is believed to have been the first lawsuit filed in the nation charging a company with violating the national Do Not Call law.

Filed in November 2003, the Attorney General’s complaint charged American Home Craft Inc. and two of the company’s officers with making illegal telemarketing phone calls to more than 120 Californians who had placed their names on the national Do Not Call registry. The complaint also charged the home improvement company with continuing to call customers after they asked to be placed on the company’s internal do-not-call list in violation of federal law.

“American Home Craft blatantly disregarded one of the most significant consumer protection laws ever enacted,” Lockyer said. “We expect all telemarketers to respect the wishes of consumers who put their names on the federal Do Not Call registry so that they may enjoy uninterrupted evenings with their families and friends in the privacy of their homes. We will continue to file complaints and obtain judgments against unscrupulous companies that interrupt people’s lives in violation of this landmark law.”

The complaint was filed against American Home Craft; Bradley Alan Smith, the company’s president; and Brent Frenchak, the former vice president in charge of marketing, who has since left the company. Under the terms of the judgment, signed by U.S. District Court Judge Jeffrey White in San Francisco, all three defendants must comply with federal and state do-not-call laws. American Home Craft and Smith also are required to implement compliance procedures that include plans for recording, investigating and reporting complaints and ensure their employees are properly trained in those procedures.

The company and its president also are required to pay $45,000 in civil penalties, $30,000 for the costs of investigating and prosecuting the case and $25,000 in restitution to the California residents who lodged complaints with the California Attorney General, the Federal Trade Commission (FTC) or the Federal Communications Commission about receiving phone calls from American Home Craft in violation of the federal do-not-call law. Individual consumers who filed a complaint against the company prior to the entry of the judgment will receive damages of up to $200 each.

The lawsuit was based on violations of the federal Do Not Call law that occurred before California’s Do Not Call statute went into effect in January 2004. Under the state law, companies that continue to place unsolicited commercial phone calls to Californians who have placed their names on the FTC’s national Do Not Call Registry can face penalties of up to $11,000 per unlawful phone call.

Based in Hayward, with offices in Sacramento, San Diego and Irvine, American Home Craft was charged with placing illegal phone calls to consumers from more than 12 area codes in California. The investigation by the Attorney General’s Office reportedly revealed that American Home Craft never attempted to purchase the Do Not Call registry when it first became available to businesses in October 2003. In addition, consumers complained they continued to receive unsolicited telemarketing calls after they had requested to be placed on the company’s internal Do Not call list, a violation of federal regulations.

In January, Lockyer filed a second lawsuit against L.M.A. Marketing Inc, for violating ththe federal Do Not Call law. The Florida-based company, doing business as Mortgage Concepts, is charged with pretending to conduct surveys in an effort to contract California consumers about refinancing their mortgages. The Attorney General received more than 250 complaints from Californians. The litigation continues.

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