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Before the
Federal Communications Commission
Washington, D.C. 20554
)
)
)
) File No. EB-03-TC-100
In the Matter of
) NAL/Acct. No. 200432170005
DYNASTY MORTGAGE, L.L.C.
) FRN: 0012612156
)
)
)
ORDER OF FORFEITURE
Adopted: April 24, 2007 Released: May 14, 2007
By the Commission:
I. Introduction
1. In this Order of Forfeiture, we assess a monetary forfeiture of
$748,000 against Dynasty Mortgage, L.L.C. ("Dynasty") for willfully
and repeatedly violating section 64.1200(c)(2) of the Commission's
rules by making telephone calls for the purpose of delivering
telephone solicitations to residential telephone consumers who
registered their telephone numbers on the National Do-Not-Call
Registry. This order imposes the maximum forfeiture amount of $11,000
for each of 68 calls made by Dynasty to 50 residential telephone
consumers in Arizona and California between March 2, 2004 and January
20, 2005.
II. Background
2. The facts and circumstances surrounding this case are set forth in the
Commission's Notice of Apparent Liability for Forfeiture in this
matter and need not be reiterated at length. Dynasty offers mortgage
financing services, and uses telephone solicitation as a means of
advertising those services. Like other entities that employ telephone
solicitations to promote commercially-available property, goods, or
services, Dynasty is subject to do-not-call provisions contained in
section 64.1200 of the Commission's rules. Section 64.1200
incorporates two options for residential telephone consumers who wish
to limit unwanted telephone solicitations: an opportunity to opt out
of most telemarketing by signing on to the National Do-Not-Call
Registry and an opportunity to direct particular entities to refrain
from telemarketing by making a company-specific do-not-call request.
Dynasty's calls that are subject to forfeiture herein relate
exclusively to provisions governing the National Do-Not-Call Registry.
3. Section 64.1200(c)(2) of the Commission's rules requires that "no
person or entity shall initiate any telephone solicitation . . . to .
. . a residential telephone subscriber who has registered his or her
telephone number on the National Do-Not-Call Registry of persons who
do not wish to receive telephone solicitations that is maintained by
the federal government." Not every promotional call, however,
constitutes a prohibited telephone solicitation under this rule. As
established by the Telephone Consumer Protection Act, the term
"telephone solicitation" does not include calls (1) to any person with
that person's prior express invitation or permission; (2) to any
person with whom the caller has an established business relationship;
or (3) by or on behalf of a tax-exempt nonprofit organization.
Accordingly, an advertising call that falls within one of these
statutory exclusions does not violate section 64.1200(c)(2). In
addition to the statutory exemptions, section 64.1200(c)(2)(iii) also
permits delivery of telephone solicitations to National Do-Not-Call
registrants in the limited situation in which the caller has a
personal relationship with the called party. Moreover, religious and
political messages are not considered to be "telephone solicitations"
and are, therefore, exempt from the Commission's National Do-Not-Call
rules.
4. To protect against prohibited telemarketing calls, entities that
advertise through telephone solicitations are required to pay fees to
access the National Do-Not-Call Registry and must "scrub" their call
lists of non-exempt residential telephone numbers contained in the
Registry. Recognizing that parties who have made good faith efforts to
comply with the national do-not-call rules may, nonetheless,
occasionally make some calls in error to registered telephone lines,
the Commission established standards for a safe harbor exemption from
liability.
5. To qualify for safe harbor protection, a seller must first demonstrate
that, as part of its routine business practice, it has: (1)
established and implemented written procedures to comply with the
do-not-call rules; (2) trained its personnel, and any entity assisting
in its compliance, in the procedures established pursuant to the
do-not-call rules; (3) maintained and recorded a list of telephone
numbers the seller may not contact; (4) used a process to prevent
telemarketing to any telephone number on any list established pursuant
to the do-not-call rules, employing a version of the National
Do-Not-Call Registry obtained from the administrator of the Registry
within a designated time frame, and has maintained records documenting
this process; and (5) used a process to ensure that it does not sell,
rent, lease, purchase, or use the Registry for any purpose except
national do-not-call compliance, and that it has purchased access to
the Registry from the Registry administrator without participating in
any cost sharing arrangement with any other entity. Finally, the safe
harbor only applies if the seller is able to show that the unlawful
calls were the result of identifiable error and made in spite of
adherence to the enumerated do-not-call procedures.
6. The Telecommunications Consumers Division ("Division") of the
Commission's Enforcement Bureau began investigating Dynasty in October
2003 in conjunction with its review of consumer complaint data
involving calls made to telephone numbers contained in the then-new
National Do-Not-Call Registry. The Division found a significant volume
of complaints involving Dynasty, and in October and November 2003,
sent letters to Dynasty seeking information both about its
telemarketing practices generally and about specific complaints from
consumers who allegedly received calls from Dynasty despite their
registration on the National Do-Not-Call Registry. After Dynasty
failed to respond, the Division issued a citation against Dynasty on
December 22, 2003. The citation warned Dynasty that future delivery of
telephone solicitations to residential consumers registered on the
National Do-Not-Call Registry could subject it to monetary forfeitures
of up to $11,000 per call. In addition, the citation informed Dynasty
that it could, within 30 days of the citation, either have a personal
interview at a Commission field office or submit a written response to
the citation.
7. Dynasty representatives contacted the Division by telephone in early
January 2004. Initially, a Dynasty representative claimed that Dynasty
was exempt from federal do-not-call regulations. Later, after Dynasty
apparently terminated that representative's employment, Dynasty
acknowledged its obligation to comply with the Commission's
do-not-call rules during telephone conversations with the Division.
Finally, by letter dated February 20, 2004, Dynasty responded in
writing to the citation, reiterating the information provided orally:
that Dynasty's failure to honor its do-not-call obligations and to
respond timely to the Division's citation was attributable to
incorrect advice from its terminated contract-employee, and that
do-not-call compliance was now a priority for Dynasty.
8. Despite Dynasty's assurances, consumers whose residential telephone
numbers are registered on the National Do-Not-Call Registry continued
to complain about telephone solicitations made by Dynasty.
Accordingly, on July 6, 2004, the Division sent to Dynasty a Letter of
Inquiry ("LOI") seeking information about consumer complaints received
after issuance of the citation, 45 of which were filed after Dynasty's
February 20 letter. The LOI directed Dynasty to provide information
regarding each complaint including, inter alia, whether and why it
called the complainants. In addition, the LOI sought information
regarding Dynasty's internal procedures to ensure compliance with the
National Do-Not-Call Registry and its own company-specific do-not-call
list.
4. Dynasty responded to the LOI on July 28, 2004. Dynasty provided some
information regarding its do-not-call efforts but did not fully answer
the LOI. In particular, Dynasty did not address the complaints
individually; instead it provided a broad general response regarding
the purpose of its telephone solicitations. Dynasty did not deny
making the calls in question but appeared to invoke the safe harbor
defense, claiming to have routine business practices largely
consistent with the safe harbor standards set forth in section
64.1200(c)(2)(i). As consumers continued to complain about Dynasty's
telemarketing calls, the Division pursued its investigation, reviewing
Dynasty's submission and contacting complaining consumers to obtain
more information about the calls they had received.
5. On March 1, 2005, the Commission issued the Dynasty NAL to propose a
forfeiture penalty against Dynasty for 70 telephone solicitations
allegedly made to residential telephone subscribers who had placed
their numbers on the National Do-Not-Call Registry. On the basis of
information provided by call recipients and Dynasty itself, along with
review of FTC National Registry documentation, the NAL concludes that
(1) Dynasty's calls were telephone solicitations made in violation of
the Commission's national do-not-call requirements; (2) Dynasty had
failed to demonstrate that it qualified for the safe harbor from
liability; and (3) the maximum forfeiture should be applied given
Dynasty's failure to implement effective national do-not-call
procedures and its handling of the calls. Supporting these findings
are sworn declarations from each consumer that outline the receipt of
Dynasty's call(s) and attest to the lack of any mitigating factors
that might justify a telephone solicitation, such as a transaction
with or inquiry to Dynasty or explicit permission for Dynasty to
solicit.
6. Responding to the NAL, Dynasty initially submitted a brief letter
challenging the proposed forfeiture. Subsequently, it filed a
voluminous submission to explain and document its assertion that it
should not be held liable for the calls at issue. In short, Dynasty
contends that it has implemented comprehensive procedures to prevent
telephone solicitations to consumers on the National Do-Not-Call
Registry, and that any calls reaching registered consumers were made
unintentionally and constitute a miniscule percentage of its total
telemarketing calls. Further, although Dynasty concedes that it placed
21 of the calls subject to forfeiture herein, it disputes the
remaining 47 calls for various reasons including that some calls could
not or may not have been made and that some consumers actually were
not on the Do-Not-Call Registry. Finally, Dynasty also argues that
"imposing any forfeiture would ultimately bankrupt this company."
7. With respect to Dynasty's claim of financial hardship, the Division
urged Dynasty to provide a more thorough explanation of its financial
status and to fully document and authenticate its financial claims. To
date, Dynasty has not provided this information or responded to the
Division's request.
III. discussion
13. At the outset, we have carefully reviewed records pertaining to each
of the 70 telephone solicitations addressed in the Dynasty NAL. We
have considered Dynasty's NAL Response and conclude that with respect
to 68 of the calls, Dynasty has failed to present evidence to warrant
rescinding or reducing the proposed forfeiture for these violations.
Dynasty's arguments against forfeiture are rooted in three assertions:
(1) that some of the calls subject to forfeiture either were not made
or cannot be proven to have been made; (2) that Dynasty has
comprehensive procedures to prevent telemarketing to consumers on the
National Do-Not-Call Registry and that any calls made in spite of
these procedures are excusable error, falling within the safe harbor
from liability; and (3) that any forfeiture threatens Dynasty's
financial solvency. We address these contentions below. Finally, we
are rescinding the proposed forfeiture with respect to two calls
because they were made one day before the recipient's Do-Not-Call
registration became effective and, thus, do not constitute violations.
A. Dynasty Has Not Rebutted Evidence of Unlawful Telemarketing Calls
14. Based upon review of its telemarketing records, Dynasty claims that 45
of the 68 calls subject to forfeiture here either were not made or
cannot conclusively be confirmed to have been made. Specifically,
Dynasty denies making nine calls and notes that it either does not
have records, or its records are inconclusive with respect to 36 of
the disputed calls. In summary, Dynasty (1) admits making 21 unlawful
calls, (2) is unable to confirm or deny making 36 calls, (3) denies
making nine calls, and (4) alleges that two calls went to telephone
numbers that were not on the National Do-Not-Call Registry.
15. We find Dynasty's claims unpersuasive. With respect to the 45 calls
that Dynasty either denies or is unable to confirm, we note again that
each of the 50 consumers who filed a complaint about receiving calls
from Dynasty has signed, under penalty of perjury, a declaration that
details the circumstances surrounding the call or calls that each
claims to have received. The fact that Dynasty cannot independently
confirm each of the 45 disputed calls at issue does not establish that
the calls were not made. First, as Dynasty admits, 21 of these calls
were made prior to full implantation of its automated calling system,
and it retained no records that would indicate whether or not it
placed the calls. Second, given that the record indicates that
Dynasty's attention to its telemarketing obligations during the time
period at issue was incomplete at best, we believe that the sworn
statements provided by consumers are more reliable than Dynasty's
records, even over those generated by Dynasty's automated
telemarketing operations. In this regard, we also note that Dynasty's
automated telemarketing system is not the only means by which
Dynasty's telemarketing calls could be made. In fact, Dynasty itself
raises questions about the reliability of its telemarketing workforce,
specifically suggesting that personnel eager to meet or exceed sales
goals may have made unauthorized calls not permitted under Dynasty's
own national do-not-call policies.
16. We also reject Dynasty's more specific claims regarding particular
calls. Dynasty is incorrect in claiming that two consumers who
reported receiving a total of six calls were not on the National
Do-Not-Call Registry at the time they were called. The telephone
numbers that Dynasty associates with the consumers at issue, however,
are not the telephone numbers reported by the complainants. The
residential numbers provided by the two consumers were indeed
registered on the National Do-Not-Call Registry for the required time
as of the date of the calls.
17. We are also unpersuaded by Dynasty's assertion that three calls cannot
have occurred because the originating telephone number obtained by the
complainants through caller ID cannot be used to make outgoing
telephone calls. It is unclear whether Dynasty is asserting that it
is actually physically impossible to make outgoing telephone calls
from the number in question, which is the main telephone number for
Dynasty's San Diego office, or that placing such calls violates
company policy because it could tie up the office telephone system. We
also note that telemarketers may lawfully transmit through caller ID
any telephone number associated with the telemarketer or party on
whose behalf a call is made, as long as the transmitted number allows
the consumer to identify the caller. A telemarketer or seller such as
Dynasty could, therefore, transmit the main office or customer service
telephone number in lieu of the actual telephone numbers from which
calls were placed. Again, given Dynasty's uncertain support for its
assertion, we believe that the complainants' sworn declarations are
the more reliable source.
18. In short, Dynasty has failed to demonstrate that it did not make any
of the 68 calls subject to forfeiture and detailed in complainants'
sworn declarations. We turn next to whether these calls fall within
the safe harbor from liability.
A. Dynasty's Practices during the Period March 2004 - January 2005 Do
Not Satisfy All Safe Harbor Criteria
19. The safe harbor from liability for unlawful telemarketing calls
applies only when a seller meets each of five separate operational
criteria and also demonstrates that any unlawful calls were made as a
result of identifiable error. The Dynasty NAL discusses in detail
various aspects of Dynasty's operations that preclude application of
the safe harbor defense to the 68 calls at issue. In determining
whether those calls fall within the safe harbor from liability, the
NAL examined information supplied by Dynasty in response to the LOI;
the complainants' declarations; and data maintained by the FTC in
connection with the National Registry. We need not repeat the NAL's
detailed analysis of how that information, available to the Commission
as of March 2005, was inconsistent with safe harbor standards.
Instead, we focus our discussion now on the new information provided
by Dynasty in its NAL Response to determine whether that information
alters our previous conclusions regarding Dynasty's failure to
demonstrate applicability of the safe harbor defense.
20. As set forth below, and reflected in Appendix A, we find that 51 of
Dynasty's calls do not fall within the safe harbor because they were
made during a period that Dynasty either had not accessed relevant
portions of the National Do-Not-Call Registry at all or had not
obtained updated versions of the Registry. The remaining 17 calls were
made at times when Dynasty had obtained relevant portions of the
Registry within required time frames. We find, nonetheless, that
Dynasty has failed to demonstrate that the safe harbor applies to
those 17 calls. The evidence before us does not show that Dynasty
conducted the required scrubs of its call lists or fully implemented
an accurate and effective written national do-not-call policy during
any part of the forfeiture period. Because Dynasty failed to meet
these safe harbor criteria, it is liable for the calls at issue.
1. Accessing the National Do-Not-Call Database - Section
64.1200(c)(2)(i)(D)
21. Under section 64.1200(c)(2)(i)(D), the safe harbor defense reflects
the linchpin of sellers' national do-not-call obligations: the
requirement to refrain from calling residential telephone consumers
who have placed their numbers on the National Do-Not-Call Registry.
Accordingly, section 64.1200(c)(2)(i)(D) limits the safe harbor
defense to an entity that can demonstrate, inter alia, that as part of
its routine business practices, it "use[s] a process to prevent
telephone solicitations to any telephone number on any list
established pursuant to the do-not-call rules, employing a version of
the national do-not-call registry obtained from the administrator of
the registry . . . [within a specified timeframe], and maintains
records documenting this process."
22. This safe harbor provision thus contains three distinct elements: (1)
the requirement to access the National Do-Not-Call Registry at
appointed times to obtain numbers that may not be called; (2) the
requirement to have a routine process for using that information to
prevent delivery of unlawful telephone solicitations, i.e., scrubbing
telemarketing lists; and (3) the requirement to maintain records that
document such access to and use of the Registry.
23. To facilitate access to the Registry, the FTC assigns a unique
subscription account number ("SAN") to each entity that purchases the
right to access the Registry. The FTC maintains a database, which is
available to law enforcement entities such as this Commission, that
records each time that a particular SAN is used to obtain the Registry
and what portion (i.e., area codes) of the Registry is accessed. The
FTC thus maintains records that document whether a seller has complied
with requirements governing the means and timing of accessing the
Registry. For 62 of the calls at issue here, Dynasty was required to
use a version of the Do-Not-Call Registry obtained no more than three
months prior to the date it made any telemarketing call. Six calls
made by Dynasty after January 1, 2005 are subject to a rule amendment
that requires use of a version of the Registry obtained no more than
31 days before any telemarketing call.
a. Dynasty Has Failed to Access the National Do-Not-Call Registry at
Appointed Times to Obtain Numbers That May Not Be Called
24. As emphasized in the Dynasty NAL, Dynasty did not access the Registry
at all between March 15, 2004 and January 6, 2005. During this almost
ten month period, Dynasty missed three deadlines - June 8-15, 2004;
September 8-15, 2004; and December 8-15, 2004 - to obtain relevant
portions of the Registry in order to scrub its telemarketing lists
within the three-month period then in effect. Dynasty made 45 calls
that are subject to forfeiture herein during the lapsed period from
June 8-15, 2004 until January 5, 2005. In addition, six of the calls
at issue herein were made between March 2 and March 9, 2004 before
Dynasty even accessed appropriate portions of the Registry for the
first time. Dynasty made 51 calls, therefore, either using outdated
Registry information or no information at all.
25. Dynasty's 2004 telemarketing plan appears to have called for Dynasty
to access the National Do-Not-Call Registry through third party lead
generators that it hired to obtain relevant portions of the Registry
on its behalf, using its SAN, and then providing scrubbed call lists.
Dynasty does not allege that any of its lead generators either failed
to obtain the Registry as ordered by Dynasty or to properly scrub call
lists; instead Dynasty briefly addresses the lapse in accessing the
Registry by referring to "stretching call lists usage." It appears,
therefore, that Dynasty consciously used outdated call lists for over
five months. Moreover, in March 2004 - more than a month after a
Dynasty representative orally admitted to Division staff the company's
obligation to comply with the Commission's national do-not-call
requirements and more than two weeks after Dynasty's president
committed, in writing, to prompt and rigorous compliance - Dynasty
made calls without ever having accessed relevant portions of the
Registry. For the 51 calls made using either outdated National
Registry data or no data at all, Dynasty's safe harbor defense fails
on these facts alone. While acceptable written do-not-call policies,
training techniques, manner of recording company-specific do-not-call
requests, and actual scrubbing of call lists may differ from seller to
seller, the safe harbor affords no discretion or variation as to a
seller's obligation to access the National Do-Not-Call Registry at the
required time.
a. Dynasty Has Failed to Demonstrate That It Implemented a Routine
Process to Use Information from the National Do-Not-Call Registry
to Prevent Delivery of Unlawful Telephone Solicitations
26. It is clear that Dynasty could not have properly scrubbed any call
list during the period June 8-15, 2004 through January 5, 2005; its
failure to access the National Do-Not-Call Registry during this period
precludes any acceptable scrub. Further, even apart from this period,
evidence suggests that Dynasty never completely scrubbed all its call
lists.
27. Either Dynasty or its third party lead generators accessed the
National Do-Not-Call Registry on March 8-15, 2004 and January 6, 2005.
Evidence does not establish, however, that Dynasty actually used the
Registry data accessed at these times to implement "a process to
prevent telephone solicitations to any telephone number" on the
Registry as required by section 64.1200(c)(2)(1)(D). Despite its
obligation to maintain records documenting its actions, Dynasty does
not present evidence that either the company itself or its third party
lead generators successfully scrubbed all of Dynasty's call lists.
Dynasty provides invoices from five lead generators relating to its
purchase of lead lists intermittently over the period December 2003
through February 2005. These records do not demonstrate that Dynasty
consistently purchased scrubbed call lists, much less that it took
steps to ensure that it actually used only scrubbed call lists. Of the
16 invoices provided by Dynasty, only one lists Dynasty's SAN that
must be used to access the National Do-Not-Call Registry on Dynasty's
behalf; 12 invoices, on the other hand, contain no entry in the space
on the form marked "SAN." One invoice contains the entry "Scrubbed
Against the National Do Not Call List." Some invoices specify area
codes for which Dynasty purchased leads while others contain generic
descriptions such as "homeowners." These scattered and vague records
do not establish that Dynasty consistently purchased scrubbed call
lists or that it took steps to ensure that every call list it used was
properly scrubbed. The mere fact that on occasion Dynasty accessed the
Registry itself or obtained scrubbed call lists does not mean that it
actually used such lists properly.
28. The lack of documentation in the record to prove that Dynasty actually
purchased scrubbed call lists or produced them on its own is not the
only factor that raises questions as to whether Dynasty properly used
information from the National Do-Not-Call Registry after its March
2004 and January 2005 access. Dynasty suggests that its failure to
obtain updated versions of the National Do-Not-Call Registry may have
resulted in calls to newly-registered consumers. The record, however,
indicates that 23 of the 32 complainants that Dynasty called between
June 8, 2004 and January 5, 2005 - the period during which it failed
to obtain updated versions of the Registry - had, in fact, been
registered on the version of the Registry obtained by Dynasty or by
its lead generators in March 2004. In short, even though Dynasty
failed to obtain updated Registry information, it could have prevented
29 of the 45 unlawful telemarketing calls made during the lapsed
period simply by using the March 2004 versions of the Registry, which
it possessed at the time it made the calls.
29. Finally, although Dynasty accessed the Registry for a second time on
January 6, 2005, it did not access the Registry again until March 2,
2005, one day after the Dynasty NAL was released and served upon
Dynasty via fax. Dynasty thus failed to access the Registry in
February 2005 as required. Although, the NAL does not include any
calls made in February or March 2005 after Dynasty's January 6 access
expired, Dynasty's continued failure to timely access the National
Do-Not-Call Registry is yet further support for our finding that it
failed to fully implement a process whereby it used the National
Do-Not-Call Registry to prevent delivery of telephone solicitations to
registered numbers.
a. Dynasty Has Failed to Demonstrate That It Has Maintained Records
Documenting Access to and Use of the National Do-Not-Call Registry
30. Section 64.1200(c)(2)(i)(D) conditions a safe harbor defense upon a
seller's maintenance of records documenting access to and use of the
National Do-Not-Call Registry. As provided in Dynasty's April 12 NAL
Response, documentation for the period March 2, 2004 through January
20, 2005 is incomplete and inconclusive. The only documentation
submitted by Dynasty related to its access to the Registry or scrubs
of its call lists are the 16 invoices described above, which fail to
demonstrate that Dynasty properly or completely scrubbed its call
lists during the forfeiture period. In fact, Dynasty does not provide
any records that document its March 2004 and January 2005 access to
the National Do-Not-Call Registry; were it not for the FTC records
regarding these access dates, which Commission staff acquired, there
would be no clear and conclusive documentation that Dynasty's SAN was
ever used to obtain the Registry.
2. Written Procedures - Section 64.1200(c)(2)(i)(A)
31. To qualify for the safe harbor exemption, a seller must demonstrate
that as part of its routine business practice, "it has established and
implemented written procedures to comply with the national do-not-call
rules." In its NAL Response, Dynasty describes at length the
procedures that it has adopted to prevent telemarketing calls to
consumers on the National Do-Not-Call Registry and to others who have
told Dynasty that they do not wish to receive its telephone
solicitations. We emphasize, however, that Dynasty's current
compliance plan and telemarketing operations are not at issue here.
32. According to Dynasty, it immediately took steps to implement effective
national do-not-call procedures when it realized in late January 2004
that it must honor the National Do-Not-Call Registry, contrary to its
contractor's advice. Dynasty states that it made significant and
immediate changes to its telemarketing operations while it worked to
develop an automated calling system, which it introduced on June 1,
2004 to replace its paper-based system for maintaining both
telemarketing "leads" and the company-specific do-not-call list. In
its NAL Response, Dynasty provides detailed descriptions of both its
automated and paper-based systems for complying with both national and
company-specific do-not-call requirements along with its training
materials and its formal do-not-call policy. These materials stand in
stark contrast to the summary responses and scant documentation that
Dynasty provided in July 2004 in response to the Division's LOI, and
it is difficult to understand why Dynasty would not have provided the
Division with complete descriptions and internal company records in
response to the LOI, which explicitly directed their submission. Even
assuming, however, that the detailed telemarketing handbook, training
materials, and other written procedures set forth in Dynasty's April
12 NAL Response existed during the forfeiture period, Dynasty does not
meet the criteria established by section 64.1200(c)(2)(i)(A).
33. A compliance plan, however well-conceived and expressed, is
meaningless if it is not fully implemented. Dynasty clearly failed
multiple times to implement a critical element. Dynasty's Telephone
Solicitation Policy calls for the company to access the National
Do-Not-Call Registry every eight to ten weeks until January 1, 2005
when access was required every month. As detailed above and in the
NAL, Dynasty missed three deadlines for accessing the Registry during
the period June 15, 2004 to January 5, 2005. In addition, when Dynasty
actually did access the National Do-Not-Call Registry (March 8-15,
2004 and January 6, 2005), evidence does not establish that Dynasty
effectively used the Registry in the manner described in its April 12
NAL Response narrative and accompanying internal documents. These
failures to follow its own procedures to both access the National
Do-Not-Call Registry at required intervals and use such information to
prevent unlawful telephone solicitations not only fall short of the
safe harbor standard to properly access and use the National
Do-Not-Call Registry but also separately indicate that Dynasty did not
effectively or fully implement its written procedures. On this basis,
Dynasty does not meet the safe harbor standard contained in section
64.1200(c)(2)(i)(A).
34. The evidence in the record makes it difficult to avoid the conclusion
that careful implementation of a national do-not-call compliance plan
did not become a priority for Dynasty until after issuance of the
Dynasty NAL. Dynasty provided detailed written materials concerning
such a plan to the Commission only in response to the NAL, despite the
fact that the staff specifically requested such records in the July
2004 LOI. This conclusion is further supported by evidence
establishing that Dynasty only began regularly accessing the National
Do-Not-Call Registry within the required time interval after the
Dynasty NAL. Such a record cannot support a finding that Dynasty
properly implemented its written compliance plan during the forfeiture
period.
3. Training of Personnel - Section 64.1200(c)(2)(i)(B)
35. Section 64.1200(c)(2)(i)(B) of the safe harbor defense requires a
seller to demonstrate that as part of its routine business practice,
"it has trained its personnel, and any entity assisting in its
compliance, in procedures established pursuant to the national
do-not-call rules." In the Dynasty NAL, we found that Dynasty's LOI
response did not reasonably demonstrate the existence of an adequate
training program to meet this safe harbor requirement. By contrast,
the materials provided by Dynasty in its NAL Response detail a
rigorous telemarketing training program that includes, as a primary
component, Dynasty's obligations with respect to both national and
company-specific do-not-call requirements. We have no information,
however, to verify that such training was conducted during the time
frame in question or in the manner described in Dynasty's most recent
pleading. Further, claims made by Dynasty telemarketers to consumers
who questioned or challenged Dynasty's calls raise questions as to
whether Dynasty accurately and effectively educated its personnel.
Nonetheless, because we have determined above that Dynasty has not met
other safe harbor criteria, we need not rule here on the adequacy of
its training program during the forfeiture period.
4. Purchasing the Registry - Section 64.1200(c)(2)(i)(E)
36. The safe harbor requires a telephone solicitor to demonstrate that it
"uses a process to ensure that it does not sell, rent, lease,
purchase, or use the national do-not-call database, or any part
thereof, for any purpose except compliance with [the do-not-call
rules] and any such state or federal law to prevent telephone
solicitations to telephone number registered on the national
database." It must demonstrate that it "purchases access to the
relevant do-not-call data from the administrator of the national
database and does not participate in any arrangement to share the cost
of accessing the national database, including any arrangement with
telemarketers who may not divide the cost to access the national
database among various client sellers." Dynasty's LOI response failed
to provide any information or statement regarding this aspect of the
safe harbor, and the NAL so noted this deficiency. In its April 122
NAL Response, however, Dynasty states that it (1) purchases the
National Do-Not-Call Registry from the administrator; (2) uses the
National Do-Not-Call Registry solely for compliance with do-not-call
requirements; and (3) does not participate in any arrangement to share
costs of accessing the National Do-Not-Call Registry. We have no
reason to question Dynasty's assertions in this regard. Compliance
with a single safe harbor requirement, however, does not remove
liability for unlawful calls.
5. Error - Section 64.1200(c)(2)(i)
37. The error aspect of the safe harbor defense exempts from liability
telephone solicitations that are the result of specific identifiable
errors that occurred during telemarketing conducted in compliance with
each do-not-call safe harbor provision contained in section
64.1200(c)(2)(i). Accordingly, failure to meet a single safe harbor
standard renders error irrelevant. Moreover, as emphasized in the
Dynasty NAL, the error defense does not apply simply because an entity
meets all other safe harbor criteria. Instead, once an entity has
demonstrated compliance with each safe harbor standard, it may then
invoke an error claim by showing that unlawful telephone solicitation
occurred as a result of a specific error. As explained above, we
conclude that Dynasty has failed to demonstrate compliance with at
least two safe harbor standards for the time frame at issue, and thus
cannot claim the safe harbor defense even if it were able to
demonstrate that particular calls are attributable to identifiable
errors.
38. Dynasty's NAL Response claims stringent procedures to ensure
compliance with National Do-Not-Call rules and appears to suggest that
any unlawful calls should be found to have been made in error. In this
regard, Dynasty compares the total number of telemarketing calls that
it has made during various periods between February 2004 and March
2005 against the number of national do-not-complaints lodged against
it during those time frames, yielding claimed complaint rates between
.00014 and .00129 percent. According to Dynasty, these miniscule
complaint levels attest to the efficacy of its do-not-call practices
and demonstrate that any unlawful calls are the result of error.
39. Further, although Dynasty does not indicate that it has discovered
specific events or oversights that may have caused such alleged
errors, it outlines possible breakdowns that could lead to unlawful
calls being made outside its normal do-not-call procedures.
40. Dynasty's arguments about complaint levels and possible glitches in
national do-not-call compliance might be credible if it had fully
implemented its compliance plan and accessed the National Do-Not-Call
Registry as required, but it did not. In addition, some of the
possible breakdowns to national do-not-call compliance that Dynasty
posits are more indicative of an inherently flawed compliance program
than error.
41. Finally, Dynasty appears to misunderstand the interplay between error
and intent. While intent is relevant in assessing whether an unlawful
telephone solicitation made by an otherwise compliant telemarketer
constitutes error, a call is not made in error simply because a
telemarketer did not intend to violate national do-not-call
requirements or did not intend to call numbers on the National
Do-Not-Call Registry. Whatever a seller's specific intent in making a
particular telemarketing call, calling a number on the National
Registry cannot be deemed unintentional when a seller has failed to
implement basic threshold procedures to guard against making such
calls. Further, it does not matter whether or not a seller's failure
to implement is intentional when such failure is substantial,
pervasive, and recurring. The safe harbor in our rules thus recognizes
that a telemarketer's intent to avoid unlawful calls is best evidenced
by detailed compliance procedures and adherence to basic requirements
such as timely access to the Registry. In short, the error defense
only applies to unlawful actions that occur despite comprehensive
policies and procedures to prevent them. Dynasty clearly did not
adhere to such procedures during the forfeiture period.
A. Dynasty Has Failed to Show that the Proposed Forfeiture for 68 Calls
Should Be Reduced or Canceled
42. Section 503(b) of the Act authorizes the Commission to assess a
forfeiture of up to $11,000 for each violation of the Act or of any
rule, regulation, or order issued by the Commission under the Act, by
a non-common carrier or other entity not specifically designated in
section 503 of the Act. In exercising such authority, we are to take
into account "the nature, circumstances, extent, and gravity of the
violation and, with respect to the violator, the degree of
culpability, any history of prior offenses, ability to pay, and such
other matters as justice may require."
43. The Dynasty NAL proposes the maximum forfeiture of $11,000 for each
alleged violation of section 64.1200(c)(2) of the Commission's rules.
Although the Dynasty NAL is the Commission's first proposed
forfeiture for violations of the national do-not-call rules, we
determined that a national do-not-call violation implicates the same
concern as a violation of the company-specific do-not-call rules and,
accordingly, applied the $10,000 base amount that the Commission had
previously proposed for company-specific do-not-call violations. In
Dynasty's case, we adjusted the base amount upward to the $11,000
maximum to reflect that (1) Dynasty's practices were "wholly
inadequate" to promote compliance with national do-not-call rules; (2)
Dynasty's violations continued despite being informed by the
Commission's staff that it was relying upon a non-existent exemption
to justify its calls; and (3) Dynasty continued to misinform consumers
that it is exempt from national do-not-call rules even after
admitting, in correspondence to the Commission, that it is subject to
these rules.
44. In the NAL Response, Dynasty seeks cancellation of the forfeiture
claiming that it has implemented a rigorous and costly national
do-not-call plan on short notice and that it did not willfully make
telephone solicitations to consumers on the National Do-Not-Call
Registry. Finally, Dynasty contends that imposition of any forfeiture
threatens its financial solvency. For the reasons set forth below, we
find that Dynasty has failed to present evidence justifying reduction
or cancellation of the proposed forfeiture with respect to the 68
calls at issue here.
1. Dynasty's Conduct
1. Dynasty failed to meet critical elements of its obligations under the
Commission's national do-not-call rules, most notably the threshold
duties to timely access the National Do-Not-Call Registry and scrub
its telemarketing lists to ensure that calls are not made to
registered numbers. Dynasty's record thus belies its claim to have
implemented an effective national do-not-call compliance plan during
the forfeiture period. Dynasty chose to engage in telemarketing
without ensuring compliance with the most basic do-not-call
requirements mandated by section 64.1200(c)(2), resulting in multiple
calls to consumers registered on the National Do-Not-Call Registry.
Regardless of Dynasty's intentions, its violations are, therefore,
both willful and repeated.
46. Dynasty's NAL Response provides detailed information about the steps
it has taken to comply with national do-not-call rules. Whatever
Dynasty's current procedures may be, however, we must consider here
the state of Dynasty's compliance at the time it made the calls
currently at issue. Even if Dynasty ultimately brought its
telemarketing activities into full and consistent compliance with
national do-not-call rules, that fact alone would not militate against
forfeiture. Consumers should be able to expect that sellers who choose
to use telemarketing to advertise their property, goods, or services
will comply with do-not-call requirements without the necessity of
costly and time-consuming enforcement actions.
47. As emphasized in the NAL, our initial goal in this case was to seek
Dynasty's compliance with the law; not to seek a forfeiture. First, as
required by the Act, we issued a citation to Dynasty, warning it
specifically about its non-compliance and requesting that it take
corrective action immediately. Next, after the citation was issued, we
took into consideration its assertion regarding the basis for its
initial noncompliance and its claim of immediate remedial actions, and
we then monitored complaints filed against Dynasty rather than
beginning a forfeiture action immediately. We commenced our forfeiture
action only after complaint levels indicated that Dynasty was still
making unlawful telephone solicitations and Dynasty's response to our
LOI revealed the insufficiency of Dynasty's national do-not-call
compliance program. Nonetheless, we did not impose a forfeiture for
any calls made by Dynasty before its February 20, 2004 letter to the
Division, which formally acknowledged its do-not-call obligations and
pledged effective enforcement. Dynasty has not met even minimal
compliance standards. Its conduct, therefore, does not merit reduction
or cancellation of the proposed forfeiture for the 68 unlawful calls.
2. Financial Hardship
48. Dynasty details its financial challenges and submits numerous
financial documents to support its claim that any forfeiture would
threaten its financial solvency, jeopardizing the continued operation
of both the Arizona and California entities. As explained in the
Dynasty NAL, the Commission will not consider reducing or canceling a
forfeiture in response to a claim of inability to pay unless the
petitioner submits: (1) federal tax returns for the most recent
three-year period; (2) financial statements prepared according to
generally accepted accounting practices ("GAAP"); or (3) some other
reliable and objective documentation that accurately reflects the
petitioner's current financial status. Any claim of inability to pay
must specifically identify the basis for the claim by reference to the
financial documentation submitted. Despite these clear requirements,
Dynasty does not include a succinct statement of its financial status
beyond a summary assertion regarding its liabilities. More critically,
Dynasty fails to provide the documentation necessary to justify
reducing or canceling the forfeiture based on financial hardship.
Dynasty has not provided any federal tax returns to support its
hardship claim. Further, although Dynasty has submitted over 30 pages
of financial records pertaining to its Arizona and California
companies, crucial information is missing. Dynasty provides various
bank account records, profit and loss statements, and balance sheets
along with copies of sworn statements from its president and chief
operating officer attesting to the accuracy of unidentified financial
records. We cannot be certain, however, as to which records the sworn
statements pertain because these statements actually predate some of
Dynasty's financial documentation. In addition, the documentation does
not include 2004 financial data for Dynasty's California operations
despite indication to the contrary in the NAL Response. This omission
prevents our consideration of a key factor necessary to assess
Dynasty's financial status and hardship claim: its total gross
revenues. Commission staff urged Dynasty to provide a more complete
and clear financial showing, including copies of its federal tax
returns, yet Dynasty has not to date responded. Dynasty's incomplete
showing fails to reliably and objectively document the company's
financial status and, thus, does not justify reducing or canceling the
forfeiture.
IV. Conclusion and Ordering Clauses
49. After reviewing the information and documentation filed by Dynasty in
its NAL Response, we find that Dynasty has failed to identify facts
or circumstances to persuade us that there is a reasonable basis for
modifying the forfeiture proposed in the Dynasty NAL with respect to
the 68 telephone solicitations listed in Appendix A. As discussed
above, Dynasty has failed to show any mitigating circumstances or
demonstrate financial hardship sufficient to warrant a reduction of
the forfeiture penalty. We are, however, canceling the proposed
forfeiture with respect two calls that were made one day before
effectuation of the call recipient's national do-not-call
registration.
50. Accordingly, IT IS ORDERED, pursuant to section 503(b) of the
Communications Act of 1934, as amended, 47 U.S.C. S 503(b), and
section 1.80 (f)(4) of the Commission's rules, 47 C.F.R. S 1.80(f)(4),
that Dynasty Mortgage, L.L.C. SHALL FORFEIT to the United States
Government the sum of $748,000 for willfully and repeatedly violating
of section 64.1200(c)(2) of the Commission's rules, as described in
the paragraphs above and detailed in Appendix A. We find that
Dynasty's Arizona and California companies are jointly and severally
liable for this forfeiture because of their common ownership and
operations, and the fact that they have acted in concert to deliver
telephone solicitations.
51. Payment of the forfeiture shall be made in the manner provided for in
section 1.80 of the Commission's rules within 30 days of the release
of this Order. If the forfeiture is not paid within the period
specified, the case may be referred to the Department of Justice for
collection pursuant to Section 504(a) of the Act. Payment of the
forfeiture must be made by check or similar instrument, payable to the
order of the Federal Communications Commission. The payment must
include the NAL/Acct. No. and FRN No. referenced above. Payment by
check or money order may be mailed to Federal Communications
Commission, P.O. Box 358340, Pittsburgh, PA 15251-8340. Payment by
overnight mail may be sent to Mellon Bank /LB 358340, 500 Ross Street,
Room 1540670, Pittsburgh, PA 15251. Payment by wire transfer may be
made to ABA Number 043000261, receiving bank Mellon Bank, and account
number 911-6106. Requests for full payment under an installment plan
should be sent to: Chief, Revenue and Receivables Operations Group,
445 12^th Street, S.W., Washington, D.C., 20554.
52. IT IS FURTHER ORDERED that a copy of this Order shall be sent by first
class mail and certified mail return receipt to Dynasty Mortgage,
L.L.C. at: (1) 2633 E. Indian School Rd., Suite 370, Phoenix, Arizona
85016; (2) 5701 W. Talavi Blvd., Suite 110, Glendale, Arizona 85306;
and (3) 4660 E. LaJolla Village Dr., Suite 400, San Diego, California
92122.
FEDERAL COMMUNICATIONS COMMISSION
Marlene H. Dortch
Secretary
Appendix A
DYNASTY MORTGAGE, L.L.C.
NATIONAL DO-NOT-CALL VIOLATIONS SUBJECT TO FORFEITURE
Call
Recipient's
Dynasty's Telephone Solicitation
D-N-C-
Telephone Call Registration Caller ID
Recipient Area Code Date of Timely
Registration Effectuation Date of Dynasty's Access to Expired Access No Access to
Date Date Call Access to D-N-C to D-N-C
Registry Registry D-N-C Registry
D-N-C Registry
1 Adams, Robert 858 (CA) 8/13/03 10/1/03 8/3/04 3/8/04 X
2 Atkinson, 619 (CA) 6/28/03 10/1/03 8/31/04 3/13/04 X
Nigel
3 Berens, 602 (AZ) 8/18/04 11/18/04 12/27/04 3/15/04 X 602-218-9221
Barbara
4 Bonomo, Robert 858 (CA) 7/23/03 10/1/03 8/3/04 3/8/04 X
5 Carlson, Jay 623 (AZ) 6/28/03 10/1/03 3/9/04 3/15/04 X 602-445-9276
E.
Dynasty
6 Chute, William 619 (CA) 6/28/03 10/1/03 8/14/04 3/13/04 X Mortgage
P.
602-218-9221
7 Demchak, Barry 858 (CA) 7/26/03 10/1/03 3/26/04 3/8/04 X 858/362-8695
8 Denisac, Frank 858 (CA) 6/28/03 10/1/03 3/2/04 3/8/04 X 858-362-8695
9 7/13/04 X 602-218-9221
10 Epps, John 858 (CA) 6/28/03 10/1/03 8/2/04 3/8/04 X 602-218-9221
11 8/11/04 X 602-218-9221
12 Ferguson, 760 (CA) 6/27/03 10/1/03 8/14/04 3/13/04 X 602-218-9221
Bruce
13 Fernando, E. 619 (CA) 7/26/03 10/1/03 4/13/04 3/13/04 X
Joe A. IV
14 Finnegan, 619 (CA) 7/26/03 10/1/03 4/12/04 3/13/04 X
Philip (Jay)
Call Recipient's
Dynasty's Telephone Solicitation
D-N-C- Registration
Solicitation Recipient's Date of Displayed
Recipient Area Code Registration Effectuation Date of Dynasty's Expired Access No Access to
Date Date Call Access to Timely Access to D-N-C Registry to D-N-C
Registry D-N-C Registry
D-N-C Registry
15 Frank, Kevin 619 (CA) 1/22/04 4/22/04 11/30/04 3/13/04 X 888-508-5592
16 Gittus, 623 (AZ) 7/6/03 10/1/03 6/7/04 3/15/04 X 602-445-9277
Michael
17 Grimes, Larry 5/10/04 X 858-362-8468
A. 619 (CA) 6/28/03 10/1/03 3/13/04
18 5/11/04 X 858-362-8598
19 Hansen, 619 (CA) 6/29/03 10/1/03 8/7/04 3/13/04 X 602-218-9221
Patricia
20 Holland, 858 (CA) 8/6/03 10/1/03 3/5/04 3/8/04 X
Christopher J.
21 Holmes, Mark 858 (CA) 9/22/03 12/22/03 11/22/04 3/8/04 X 888-508-5592
22 Jaycox, 480 (AZ) 10/13/03 1/13/04 8/2/04 3/15/04 X
Antoinette
23 Johnson, Todd 602 (AZ) 4/14/04 7/14/04 10/26/04 3/15/04 X
24 Kertesz, Joe 480 (AZ) 4/25/04 7/25/04 8/16/04 3/15/04 X 602-218-9221
25 1/6/05 X 602-218-9221
26 Koepke, Kevin 480 (AZ) 8/2/04 11/2/04 1/19/05 1/06/05 X 602-218-9221
27 1/20/05 X 602-218-9221
Dynasty
28 Langevin, 858 (CA) 7/26/03 10/1/03 9/27/04 3/8/04 X Mortgage
Edwin
888-508-5592
29 Lauterbach, 12/13/04 X 602-218-9221
Lynette 480 (AZ) 8/16/04 11/16/04 3/15/04
30 12/13/04 X 602-218-9221
31 Lewis, Jeffrey 619 (CA) 6/30/03 10/1/03 7/10/04 3/13/04 X
32 11/30/04 X 602-218-9221
33 Logan, 12/1/04 X 602-218-9221
Michelle 623 (AZ) 5/15/04 8/15/04 3/15/04
34 12/6/04 X 602-218-9221
35 12/18/04 X 602-218-9221
Call Recipient's
Dynasty's Telephone Solicitation
D-N-C- Registration
Solicitation Recipient's Caller ID Displayed Date of Timely Expired
Recipient Area Code Registration Effectuation Dynasty's Access to Access to No Access to
Date Date Date of Call Access to D-N-C D-N-C
Registry Registry D-N-C Registry
D-N-C Registry
Logan,
35 Michelle 623 (AZ) 5/15/04 8/15/04 12/19/04 3/15/04 X 602-218-9221
(cont.)
37 7/8/04 X 602-218-9221
38 Madden, 7/19/04 X 602-218-9221
William 619 (CA) 7/26/03 10/1/03 3/13/04
39 8/11/04 X 602-218-9221
40 8/18/04 X 602-218-9221
41 Marler, James 619 (CA) 6/29/03 10/1/03 7/19/04 3/13/04 X
42 McKenzie, 858 (CA) 7/1/03 10/1/03 12/7/04 3/8/04 X
James
43 McKenzie, 619 (CA) 7/1/03 10/1/03 7/8/04 3/13/04 X
Thomas
44 Mitchell, 619 (CA) 7/18/03 10/1/03 4/6/04 3/13/04 X
Kelly
45 Neuberg, Karen 480 (AZ) 7/10/04 10/10/04 12/20/04 3/15/04 X 602-445-0070
Dynasty
46 Novitz, Stuart 858 (CA) 6/27/03 10/1/03 7/20/04 3/8/04 X Mortgage
602-218-9221
47 Oleska, Myron 619 (CA) 7/13/03 10/1/03 8/18/04 3/13/04 X
48 Pickwell, 858 (CA) 6/30/03 10/1/03 3/2/04 3/8/04 X
Sheila
Dynasty
49 Ramsey, Marian 480 (AZ) 7/1/03 10/1/03 5/8/04 3/15/04 X Mortgage
602-445-9256
50 Recker, Irene 858 (CA) 6/29/03 10/1/03 7/12/04 3/8/04 X
51 Sometime between 10/27/04 X
Rice, Marilyn 858 (CA) 6/29/03 10/1/03 and11/8/04 3/8/04 602-218-9221
52 X
11/8/04
Call Recipient's
Dynasty's Telephone Solicitation
D-N-C- Registration
Telephone Call ----------------------------- -------------------------------------------------------------- Caller ID ------------------------ -----------------------------------
Solicitation Recipient's Displayed Date of Timely Expired
Recipient Area Code Registration Effectuation Date of Dynasty's Access to Access to No Access to
Date Date Call Access to D-N-C D-N-C
Registry Registry D-N-C Registry
D-N-C Registry
53 Rippetoe, 858 (CA) 6/27/03 10/1/03 8/9/04 3/8/04 X
Patrick
54 Rumsey, Eric 619 (CA) 6/27/03 10/1/03 4/10/04 3/13/04 X
55 12/30/04
56 1/4/05 X X 602-218-9221
Scotti, Diane 623 (AZ) 9/25/04 12/25/04 3/15/04
57 1/6/05 X X 602-218-9221
58 1/13/05
59 Stewart, Hal 480 (AZ) 9/23/04 12/23/04 12/29/04 3/15/04 X 602-445-0070
60 Taub, Charles 858 (CA) 7/10/03 10/1/03 3/9/04 3/8/04 X
61 Torkington, 619 (CA) 8/29/03 10/1/03 5/13/04 3/13/04 X 858-362-8585
Adrian
62 Van Hoven, 3/8/04 X 602-445-9276
Lynn 480 (AZ) 6/28/03 10/1/03 3/15/04
63 3/8/04 X 602-445-9276
64 Vizcarra, 760 (CA) 7/26/03 10/1/03 7/13/04 3/13/04 X 602-218-9221
Victor
65 Walker, Claire 619 (CA) 4/9/04 7/9/04 9/23/04 3/13/04 X 888-508-5592
Dynasty
66 Wassel, 858 (CA) 7/26/03 10/1/03 6/1/04 3/8/04 X Mortgage
Theodore A.
858-362-8585
67 Worthington, 858 (CA) 6/28/03 10/1/03 8/25/04 3/8/04 X
Mary
68 Zanelli, 858 (CA) 7/26/03 10/1/03 8/6/04 3/8/04 X
Elizabeth
----------------------------- ----------------------------- ---------------------------------- ----------------------------------
According to Dynasty, "Dynasty Mortgage" refers to two separate companies
owned by Curtis L. White who serves both as President and Chief Executive
Officer. See Dynasty Response to Apparent Liability for Forfeiture, dated
April 12, 2005. The entities, both named Dynasty Mortgage L.L.C., were
organized separately in Arizona and California in 2000 and 2002,
respectively, although Dynasty's own website and internal documents have
represented the companies as a single entity. Because of their common
ownership and operations, and the fact that the Arizona and California
companies have acted in concert to deliver telephone solicitations, we
find both Dynasty entities jointly and severally liable for the forfeiture
imposed herein. We have obtained information indicating that Dynasty may
have ceased operations. See Better Business Bureau of Central and Northern
Arizona, Reliability Report, Jan. 16, 2007 ("According to information in
the Bureau files, it appears that the company is no longer in business.
The numbers the Bureau had for this company are disconnected, and
directory assistance does not have a listing for this company. The
Bureau's mail to this company has been returned as undeliverable."). In
addition, Dynasty's California telephone number is not in service, and the
website that served both Dynasty's Arizona and California businesses is no
longer operating. Further, the Arizona Department of Financial
Institutions reports that on April 27, 2006, Dynasty's license as a
mortgage broker was revoked. See Arizona Department of Financial
Institutions, Summary of Actions Report at 42 (April 2006),
http://azdfi.gov/Forms/SAR_2006_04.pdf. Records of the Arizona Corporation
Commission show that in April 2006, an individual named Curtis White
accepted appointment as the statutory agent for Preferred Mortgage
Services, Inc., a company incorporated in the state of California in 1991
and seeking to do business in Arizona. See Preferred Financial Group, Inc.
d/b/a Preferred Mortgage Services, Inc., Application for Authority to
Transact Business in Arizona (Apr. 19, 2006). At the time of the
telemarketing violations addressed herein, Dynasty operated out of two
offices in Arizona and one in California: (1) 2633 E. Indian School Rd.,
Suite 370, Phoenix, Arizona 85016; (2) 5701 W. Talavi Blvd., Suite 110,
Glendale, Arizona 85306; and (3) 4660 E. LaJolla Village Dr., Suite 400,
San Diego, California 92122.
Dynasty Mortgage, L.L.C., Notice of Apparent Liability for Forfeiture, 20
FCC Rcd 4901 (2005) ("Dynasty NAL" or "NAL"). The Dynasty NAL was issued
pursuant to section 503 of the Communications Act of 1934, as amended,
which gives the Commission authority to assess a forfeiture against any
person who has "willfully or repeatedly failed to comply with any of the
provision of this Act or of any rule, regulation, or order issued by the
Commission under this Act. . . ." 47 U.S.C. S 503(b)(1). Section 503
provides that the Commission must assess such penalties through the use of
a written notice of apparent liability or notice of opportunity for
hearing. Id. at S 503(b)(3), (4).
47 C.F.R. S 64.1200(c)(2), (d).
Id. The Commission's do-not-call rules closely correspond to those of the
Federal Trade Commission ("FTC"), which shares federal enforcement
responsibilities with this Commission and also maintains and manages the
National Do-Not-Call Registry. As provided in the Commission's 2003 order
that incorporated the Registry in section 64.1200, we have focused our
enforcement efforts in this area on entities that fall outside the FTC's
jurisdiction: communications common carriers, airlines, insurance
companies, banks, credit unions, savings and loans, and intrastate calls
by any entity. See Rules and Regulations Implementing the Telephone
Consumer Protection Act of 1991, Report and Order, 18 FCC Rcd 14014,
14138-39 (2003) ("2003 TCPA Order").
47 C.F.R. S 64.1200(c)(2).
Section 64.1200(c)(2)(ii) of our rules requires that prior express
invitation or permission to call a residential telephone consumer who has
signed on to the National Do-Not-Call Registry "must be evidenced by a
signed, written agreement between the consumer and seller which states
that the consumer agrees to be contacted by this seller and includes the
telephone number to which the calls may be placed." 47 C.F.R. S
64.1200(c)(2)(ii).
For do-not-call purposes, the term "established business relationship"
means "a prior or existing relationship formed by a voluntary two-way
communication between a person or entity and a residential subscriber with
or without an exchange of consideration, on the basis of the subscriber's
purchase or transaction with the entity within the eighteen (18) months
immediately preceding the date of the telephone call or on the basis of
the subscriber's inquiry or application regarding products or services
offered by the entity within the three months immediately preceding the
date of the call, which relationship has not been previously terminated by
either party." 47 C.F.R. S 64.1200(f)(3).
47 U.S.C S 227(a)(3); 47 C.F.R. S 64.1200(f)(9).
The term "personal relationship" means "any family member, friend, or
acquaintance of the telemarketer making the call." 47 C.F.R. S
64.1200(f)(11).
2003 TCPA Order, 18 FCC Rcd at 14040. A call containing such speech,
however, may not be exempt if it merely "serve[s] as a pretext to an
otherwise prohibited advertisement." Id. at 14040 n. 141.
"Scrubbing" refers to comparing a company's call list to the National
Do-Not-Call Registry and eliminating from the call list all non-exempt
numbers contained in the National Registry that are not covered by an
exemption. 2003 TCPA Order, 18 FCC Rcd at 14023 n. 37.
47 C.F.R. S 64.1200(c)(2)(i); 2003 TCPA Order, 18 FCC Rcd at 14040.
Since January 1, 2005, telemarketers are required to use a version of the
Registry that is no more than 31 days old. In other words, telephone
solicitors are, in effect, required to scrub their call lists against the
National Do-Not-Call Registry no more than 31 days before making any call.
Consequently, unlawful calls may be prosecuted no sooner than 31 days
after a consumer has signed on to the National Do-Not-Call Registry. See
Rules and Regulations Implementing the Telephone Consumer Protection Act
of 1991, Order, 19 FCC Rcd 19215 (2004) (amending section
64.1200(c)(2)(i)(D)). Prior to January 1, 2005, and during the time period
relevant to most of the calls at issue here, telemarketers were permitted
to use a version of the Registry that was no more than three months old.
See para. 23, infra.
47 C.F.R. S 64.1200(c)(2)(i).
Division staff reviewed do-not-call complaints received by both this
Commission and the FTC.
Letters from Kurt A. Schroeder, Deputy Chief, Telecommunications Consumers
Division, to Dynasty Mortgage, dated Oct. 6, 2003 and Nov. 18, 2003.
If, as here, an alleged violator does not hold a Commission license,
permit, certificate, or authorization, the Commission may not initiate a
forfeiture proceeding without first issuing a warning citation. 47 U.S.C.
S 503(b)(5). If the citation recipient continues the unlawful behavior
after receiving the citation, the Commission may propose monetary
penalties, but only for those violations that occur after issuance of the
citation.
Citation from Kurt A. Schroeder, Deputy Chief, Telecommunications
Consumers Division, to Dynasty Mortgage, dated Dec. 22, 2003.
Commission staff disputed this claim and urged the Dynasty representative
to respond to the citation in writing to fully explain the basis for its
position. Dynasty NAL, 20 FCC Rcd at 4905.
See id. (reporting January 30, 2004 and February 19, 2004 telephone
conversations).
Letter from Curtis L. White, President, Dynasty Mortgage, to Kurt A.
Schroeder, Deputy Chief, Telecommunications Consumers Division, dated Feb.
20, 2004.
As explained below, we are canceling the proposed forfeiture for two calls
that were made prior to effectuation of the call recipient's do-not-call
registration. See para. 13, infra.
Each complainant has signed a declaration, under penalty of perjury,
asserting that (1) receipt of a telephone call or calls from Dynasty
Mortgage on the complainant's residential telephone line despite
registration of that number on the National Do-Not-Call Registry; (2)
absence of prior express permission or invitation for the call(s); and (3)
absence of a transaction with Dynasty or any of its affiliated companies
within the 18 months immediately preceding the call(s), or an inquiry or
application to any of these entities within the three months immediately
preceding the call(s). In addition, three complainants who recorded the
name of the individual calling on behalf of Dynasty attest that they do
not, to the best of their knowledge, have a personal relationship with the
caller. Finally, 29 complainants also attest to receipt of caller ID
information, which either explicitly identified Dynasty or displayed a
telephone number traceable to Dynasty in the case of 44 calls.
Letter from Curtis L. White, President, Dynasty Mortgage, to Kurt
Schroeder, Deputy Chief, Telecommunications Consumers Division, dated Mar.
31, 2005 ("March 31 NAL Response"); Response to Apparent Liability for
Forfeiture, dated Apr. 14, 2005 ("April 14 NAL Response") (collectively
"NAL Response").
This figure does not include the two calls for which we are canceling the
proposed forfeiture. See n. 22, supra, and para. 13, infra.
March 31 NAL Response.
Letter from Kurt Schroeder, Deputy Chief, Telecommunications Consumers
Division, to Curtis L. White, President, Dynasty Mortgage, dated Dec. 22,
2005.
The two calls at issue were received by Hal Stewart on December 22, 2004.
Mr. Stewart's residential telephone number was registered on the National
Do-Not-Call Registry on September 23, 2004 and that registration became
effective on December 23, 2004. The December 22^nd calls, therefore, are
not violations. Mr. Stewart received another call from Dynasty on December
29, 2004, which is a violation and subject to forfeiture herein. See
Appendix A, infra.
Dynasty concedes making 21 calls but claims without elaboration that 10 of
those calls were never actually completed ("21 prohibited calls . . . are
confirmed to have been dialed of these 10 only were connected"). April 12
NAL Response at 20.
Dynasty notes that its review is complicated by the fact that its original
paper-based telemarketing system did not generate records that can be
reviewed now to determine whether particular calls were made.
Dynasty makes this claim with respect to 38 of the 70 calls specified in
the Dynasty NAL. As indicated above, however, we are rescinding the
proposed forfeiture for two of these calls. See para. 13, supra. Dynasty's
position with respect to these calls is not entirely clear: Dynasty both
states that the identified complainants "are assumed to have been called"
and that the calls to those individuals "can not be confirmed nor denied."
April 12 NAL Response at 18, 20.
See n. 23, supra.
Dynasty's position with respect to these calls is not entirely clear:
Dynasty both states that the identified complainants "are assumed to have
been called" and that the calls to those individuals "can not be confirmed
nor denied." April 12 NAL Response at 18, 20.
See paras. 19-34, infra.
Dynasty reports that its automated records are "inconclusive" with respect
to 17 calls that complainants claim to have received after Dynasty's new
automated telemarketing system was introduced in June 2004. April 12 NAL
Response at 20.
Id. at 20, 23.
Dynasty admits two of the calls but maintains that its automated records
do not show that the remaining four calls were made. April 12 NAL
Response at 19.
The residential telephone numbers provided in the consumers' sworn
declarations are different from those that Dynasty attributes to its
calls. In one case, Dynasty indicates that it called a consumer, Michelle
Logan, at a California telephone number that was supposedly not on the
National Do-Not-Call Registry at the time of the call. The NAL, however,
applies to calls made to an individual named Michelle Logan at an Arizona
telephone number. Ms. Logan reports receiving a total of five calls within
less than one month. In the other case, involving a call received by
Antoinette Jaycox, two online telephone directories confirm that the
telephone number provided in Ms. Jaycox 's declaration is listed under the
name "Antoinette Jaycox" while the number that Dynasty claims to have used
to call Ms. Jaycox is listed under another name. Dynasty's errors in this
regard may stem from the fact that it apparently reviewed its
telemarketing records by call recipients' name, and did not request from
the Division the consumer declarations, each of which lists the telephone
number at which the consumer received Dynasty's call(s). For privacy
reasons, the declarations are not routinely-available Commission records
like the NAL itself. The Division, however, makes such materials available
to NAL recipients upon request.
As shown in Appendix A, we have confirmed that each residential telephone
number provided by the 50 complainants in this case was timely and
properly registered on the National Do-Not-Call Registry at the time the
68 calls subject to forfeiture were made.
Appendix A of the NAL incorrectly noted that one consumer, Joe Fernando,
had provided caller ID information. Instead, as indicated in Mr.
Fernando's declaration, the listed telephone number was provided orally by
Dynasty's telemarketer.
"This phone line is not used for outbound calls; doing so would occupy the
main incoming line preventing incoming calls. The phone system at 4660 E.
La Jolla Village Dr. Ste. 400 San Diego, CA 92122 does not allow outbound
calls using the phone line 858-362-8585." Dynasty April 12 NAL Response at
20.
47 U.S.C. S 64.1601(e); 2003 TCPA Order, 18 FCC Rcd at 14122.
The Dynasty NAL does not address Dynasty's compliance with the safe harbor
requirement to record company-specific do-not-call requests, 47 C.F.R. S
64.1200(c)(2)(i)(C). Likewise, we do not address this safe harbor aspect
here although we note that we have not received complaints that Dynasty
has failed to honor company-specific do-not-call requests within the
required 31-day period.
See n. 13, supra.
47 C.F.R. S 64.1200(c)(2)(i)(D)
In addition, the FTC's Internet do-not-call complaint system automatically
checks the complainant's telephone number to determine whether and when
that number was added to the National Do-Not-Call Registry. The system
then compares the registration date against the date of the alleged
telemarketing call, and only accepts complaints in which the complainant's
telephone number was timely registered at the time of the alleged call. In
this case, our staff has independently confirmed that each complainant's
telephone number was registered on the National Do-Not-Call Registry for
the required three months or 31 days before the alleged call was made. As
indicated above, we have discovered that two calls for which we proposed a
forfeiture penalty were made one day prior to effectuation of the call
recipient's do-not-call registration. See para 13, supra. This complainant
also received a call from Dynasty after effectuation of his do-not-call
registration, which was accepted by the FTC's automated complaint system.
See n. 13, supra.
Dynasty NAL, 20 FCC Rcd at 4912. As indicated in the NAL, our staff
obtained FTC do-not-call records that show that Dynasty's SAN was used to
access portions of the National Registry twice during the forfeiture
period: first, over the course of one week in March 2004, and second, on
January 6, 2005. Between March 8 and March 15, 2004, Dynasty accessed
portions of the Do-Not-Call Registry for three Arizona and three
California area codes. On January 6, 2005, Dynasty accessed these same
portions of the Registry and, in addition, portions for two new Arizona
area codes, one new California area code, and one Nevada area code.
April 12 NAL Response at 16-17, Exhibit A (5-16). Dynasty notes that
beginning on January 6, 2005, it also "began accessing the National
Registry directly and appending the change list to its company specific
internal do not call list." April 12 NAL Response at 17.
April 12 NAL Response at 27.
See para. 7, supra.
Dynasty states that it began an interim "lead database" system of managing
its do-not-call obligations in February 2004. April 12 NAL Response at 3.
Yet it did not access the National Do-Not-Call Registry until March 8-15,
2004.
See para. 30, infra.
April 12 NAL Response at Exhibit C.
The FTC's National Registry documentation does not indicate that Dynasty's
SAN was used to access the Registry around the time specified in the
invoice, January 2004.
Again, however, FTC records do not show that Dynasty's SAN was used to
access the Registry around the time of this invoice, November 2004.
Dynasty April 12 NAL Response at 22.
A December 2004 amendment to Dynasty's June 2004 Telephone Solicitation
Policy explicitly recognizes that, beginning January 1, 2005, Dynasty must
access the Registry no less than every 31 days rather than every three
months. Dynasty April 12 NAL Response at Exhibit A (Amendment).
See para. 27, supra.
47 C.F.R. S 64.1200(c)(2)(i)(A).
April 12 NAL Response at 2-8.
Id.
We note that accessing the Registry every 8-10 weeks goes beyond the
requirements in effect for most of the forfeiture period: that call lists
had to be scrubbed against a version of the National Do-Not-Call Registry
no more than three months old. See n. 13, supra.
April 12 NAL Response, Exhibit A.
Between March 2, 2005 and September 27, 2005 Dynasty accessed the Registry
on ten different dates. During this time, Dynasty twice briefly exceeded
the 31-day maximum; the interval between access was 33 days between April
and May and 36 days between August and September.
Although Dynasty's current conduct is not subject to forfeiture herein,
FTC records show that Dynasty's last access to the Registry occurred on
September 27, 2005.
47 C.F.R. S 64.1200(c)(2)(i)(B).
Despite Dynasty's February 20, 2004 written assurance that it would
abandon its previous claim that it was exempt from national do-not-call
rules, two complainants report telephone solicitations they received in
June and July 2004 during which they were told - once by an individual
identified as a Dynasty supervisor - that Dynasty was exempt from national
do-not-call requirements. Declaration of Theodore A. Wassel (during June
1, 2004 call, Dynasty manager stated Dynasty is exempt from the National
Do-Not-Call Registry); declaration of Stuart Novitz (during July 20, 2004
call, Dynasty claimed to be a "federally exempt company for telemarketing
purposes"). We expect that effective training of Dynasty's telemarketers
would preclude such claims, especially by supervisory personnel.
47 C.F.R. S 64.1200(c)(2)(i)(E).
Id.
April 12 NAL Response at 16.
20 FCC Rcd at 4909.
See para. 5, supra.
April 12 NAL Response at 12-14.
Dynasty briefly acknowledges its lapse in accessing the National
Do-Not-Call Registry. See April 12 NAL Response at 21, 27. Dynasty appears
to believe that it unlawfully failed to access the Registry in March,
August, and December 2004. Id. at 21. However, as indicated above,
Dynasty's three missed deadlines to access the Registry occurred in June,
September, and December 2004. See para. 24, supra.
April 12 NAL Response at 21-23 (describing various possible technical and
human errors).
April 12 NAL Response at 23 ("A telemarketer will often deviate from
established scripts or training in an attempt to entice a sale. . . .
Telemarketers have been found to have created and utilized their own call
lists not in accordance with Dynasty's established procedures for
obtaining current call lists.") Id. at 21 ("If data in call lists or do
not call lists are not formatted correctly information can pass through. A
phone number in a call list formatted as (123) 456-7890 will not be
scrubbed if the same number is in the do not call list as 1234567890.").
The NAL notes that "an error claim should be supported by evidence showing
that otherwise unlawful telephone solicitations were made unintentionally
and detailing any procedural breakdowns that led to such calls, as well as
the steps that the seller has taken to minimize future errors." See
Dynasty NAL, 20 FCC Rcd at 4909.
Section 503(b)(2)(C) provides for forfeitures up to $10,000 for each
violation in cases not covered by subparagraphs (A) or (B), which address
forfeitures for violations by licensees and common carriers, among others.
See 47 U.S.C. S 503(b). Pursuant to the Debt Collection Improvement Act of
1996, P.L. 104-134, 110 Stat. 1321-358, the statutory maximum amount for a
forfeiture penalty shall be adjusted for inflation at least once every
four years. Accordingly, the $10,000 forfeiture ceiling has been adjusted
to $11,000. 47 C.F.R. S 1.80(b)(5). Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, 15 FCC Rcd 18221 (2000); Amendment of Section 1.80 of the
Commission's Rules and Adjustment of Forfeiture Maxima to Reflect
Inflation, 19 FCC Rcd 10945 (2004).
47 U.S.C. S 503(b)(2)(D); 47 C.F.R. S 1.80(b)(4).
Dynasty NAL, 20 FCC Rcd at 4913 (citing AT&T Corporation, Notice of
Apparent Liability for Forfeiture, 18 FCC Rcd 23398 (2003)).
Id. at 4914.
As a related matter, Dynasty contends that it did not misinform consumers,
arguing that reported conversations between Dynasty telemarketers and
complainants are of questionable accuracy or isolated and ambiguous. April
12 NAL Response at 25 We note that each of these complainants signed a
sworn declaration attesting to statements made by Dynasty telemarketers,
including supervisory personnel. Moreover, our forfeiture, including the
upward adjustment, is rooted in the totality of Dynasty's noncompliant
conduct, not simply its reported conversations with call recipients.
Dynasty NAL, 20 FCC Rcd at 4014.
See paras.
When Dynasty discovered in January 2004 that its telemarketing operations
were unlawful, it could have chosen to suspend telemarketing operations
briefly until it was able to ensure compliance. As discussed below, we
have not imposed a forfeiture penalty for any of Dynasty's unlawful
telephone solicitations delivered before March 2, 2004. See Appendix A,
para. 47, infra.
"Willful" in this context means that the violator knew that he was doing
the act in question, in this case, initiating a telephone solicitation.
See Southern California Broadcasting Co., 6 FCC Rcd 4387, 4388 (1991)
("Southern California"). A violator need not know that his action or
inaction constitutes a violation; ignorance of the law is not a defense or
mitigating circumstance. Id. (citing Vernon Broadcasting, Inc., 60 RR 2d
1275, 1277 (1986); Fay Neel Eggleston, 19 FCC 2d 829 (1969)). The
Commission may also assess a forfeiture for violations that are merely
repeated, and not willful. See, e.g., Callais Cablevision, Inc., 16 FCC
Rcd 1359 (2001) ("Callais Cablevision") (issuing a notice of apparent
liability for forfeiture for, inter alia, a cable television operator's
repeated signal leakage). The term "repeated" means that the act was
committed or omitted more than once, or lasts more than one day. Callais
Cablevision, 16 FCC Rcd at 1362; Southern California, 6 FCC Rcd at 4388.
See para. 32, supra.
As noted above, Dynasty again has neglected to access the National
Do-Not-Call Registry within the required time frame. See n. 65, supra.
Assuming that Dynasty is continuing its telemarketing activities, the most
recent lapse - failure to access the Registry since September 27, 2005 -
is another indication that Dynasty's do-not-call compliance remains
haphazard.
Seawest Yacht Brokers, 9 FCC Rcd 6099 (1994) ("Corrective action taken to
come into compliance with Commission rules or policy is expected, and does
not nullify or mitigate any prior forfeitures or violations."').
Dynasty NAL, 20 FCC Rcd at 4914.
Dynasty lists various factors that it claims threaten the companies'
financial viability ranging from losses from embezzlement and failed
business ventures, to expenditures associated with its national
do-not-call compliance program, to increased competition and cyclical
downswings, to negative publicity associated with our warning citation and
NAL. See NAL Response at 27-28. We note here that national do-not-call
compliance costs do not appropriately factor into a financial hardship
analysis; entities that cannot afford full do-not-call compliance should
not be engaged in telemarketing.
20 FCC Rcd at 4914, n. 58.
See para. 12, supra.
47 U.S.C S 504(a).
See 47 U.S.C S 1.1914.
Shows Dynasty's most recent access to the National Do-Not-Call Registry
prior to the date of its telephone solicitation. When Dynasty failed to
access the Registry before making a telephone solicitation, the date
provided is the access date closest to the date of the telephone
solicitation.
Shows Dynasty's most recent access to the National Do-Not-Call Registry
prior to the date of its telephone solicitation. When Dynasty failed to
access the Registry before making a telephone solicitation, the date
provided is the access date closest to the date of the telephone
solicitation.
Shows Dynasty's most recent access to the National Do-Not-Call Registry
prior to the date of its telephone solicitation. When Dynasty failed to
access the Registry before making a telephone solicitation, the date
provided is the access date closest to the date of the telephone
solicitation.
Shows Dynasty's most recent access to the National Do-Not-Call Registry
prior to the date of its telephone solicitation. When Dynasty failed to
access the Registry before making a telephone solicitation, the date
provided is the access date closest to the date of the telephone
solicitation.
(Continued from previous page)
(continued....)
Federal Communications Commission FCC 07-67
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Federal Communications Commission FCC 07-67