Multichannel retailer Talbots has agreed to pay the Federal Trade Commission $112,000 to settle the agency’s claim that it failed to provide consumers with a proper opt-out option in some of its telemarketing calls.
It is the first civil penalty case brought by the FTC based on December 2008 amendments to the Telemarketing Sales Rule (TSR), which included new specifics on allowing consumers to opt-out of prerecorded messages, according to Michael Tankersley, senior staff lawyer at the FTC.
Talbots did not admit any wrongdoing in paying the fine.
The FTC alleged that Talbots, working with Irvine, CA-based SmartReply, violated the rules between February and July 2009 with seven advertising campaigns for both its Talbots and J. Jill clothing brands. The FTC said in an April 27 statement on the settlement that SmartReply made 3.4 million “robocalls” to consumers based on messages it drafted and had approved by Talbots. The violations within those calls include complaints about the total lack of opt-out options or the manner in which the opt-out was presented. It included an instance where customers who pressed a key to opt-out were sent to a second ad recording “before they were asked to press another prompt to get on the company’s do-not-call list.”
Julie Lorigan, Talbot’s SVP of investor and media relations, sent DMNews a statement but declined to answer further questions.
“The matter has been resolved amicably with no admission of liability on behalf of the company,” she wrote. “The complaint was filed by the FTC as part of the normal settlement procedures. The filing of the agreed stipulation of judgment was made in ordinary course.”
Tankersley said the FTC investigated Talbots after receiving consumer complaints. “They didn’t implement the opt-out correctly,” he said.
SmartReply was also ordered to pay a $112,000 civil penalty. According to the FTC, SmartReply, which specializes in mobile marketing, was unable to pay the full penalty but agreed to settle for $49,000. Calls to SmartReply executives were not immediately returned.
Both Talbots and SmartReply agreed to orders that will prevent them from violating the rule in the future, the FTC said.
The last time the FTC prosecuted so-called “robocalls” was in December 2009. The FTC made it illegal on September 1, 2009, to deliver prerecorded phone messages without consumers’ consent. The Talbots’ calls fall outside of those dates but still violated the new opt-out rules, the FTC said.
“With the change in leadership, it has become very clear that enforcement is a much bigger initiative,” said Tim Searcy, executive director of the American Teleservices Association. “They feel the rules have been in place long enough that they should understand them and comply – and I agree.”
When asked if the FTC has taken a harder stance toward marketers overall, Tankersley replied, “It’s a continued approach to enforcing these rules. The rules with respect to robocalls have been on the books for a while.”
The TSR was enacted in 1995, and further amended in 2003 when the do-not-call list went into effect.
“Anybody who’s regularly doing telemarketing ought to be getting legal advice because they have to be concerned about the rules,” said Tankersley. “It’s part of any compliance marketing program.”
Talbots operates 580 locations in 46 states, the District of Columbia and Canada. It also hosts an e-commerce site at www.talbots.com and catalogs for its brands.