Dish Hit With Record $280 Million Fine for Illegal Robocalls

(Bloomberg) -- Dish Network Corp. must pay $280 million to the U.S. and four states for using robocalls to consumers on do-not-call lists, marking what the government says is a record fine for telemarketing violations.

U.S. District Judge Sue Myerscough issued the order Monday, directing the company to pay $168 million to the federal government and $84 million to California, Illinois, North Carolina and Ohio for federal law violations. An additional $28 million in fines was awarded to California, North Carolina and Ohio for violations of state law.

Myerscough also prohibited the company from violating do-not-call laws going forward and imposed a 20-year plan for supervision of its telemarketing.

The company disagrees with the ruling and will appeal it, a spokesman said.

The U.S. and the four states sued Dish in 2009, alleging the company violated two consumer telemarketing laws by making more than 55 million illegal calls. The U.S. asked for $900 million in fines, while the states sought more than $110 million. Nicole Navas Oxman, a Justice Department spokeswoman, said the fines imposed by the judge are the largest-ever in a robocall case, while declining to immediately comment further.

Dish blamed contractors and subcontractors for more than 90 percent of bad calls, terming the rest of the contacts inadvertent. The company said it fired the offending contractors when Dish learned of the illegal activity.

‘Did Nothing'

The company knew its contractors, in many cases, were violating do-not-call laws “and did nothing,'' the judge said Monday. The company's retail sales managers “showed little concern with compliance,'' she said.

While the judge spared the company from an immediate telemarketing ban sought by the plaintiffs, she said she imposed a compliance plan on the company because she's “convinced that at least some in Dish management do not believe that Dish really did anything wrong or harmed anyone with these millions and millions of illegal calls.''

“The evidence supports the conclusion that the pressure needs to be maintained to keep Dish's marketing personnel from reverting to their practice of trying to get around the rules,” Myerscough wrote.

The penalties imposed on Dish are unfair compared with those in enforcement actions that were settled by companies including DirecTV, Comcast Corp. and Caribbean Cruise Lines, Dish spokesman Bob Toevs said in a statement.

“Dish has long taken its compliance with telemarketing laws seriously, has and will continue to maintain rigorous telemarketing compliance policies and procedures, and has topped multiple independent customer service surveys along the way,” Toevs said.

Acting Assistant Attorney General Chad A. Readler said in a statement that the case “demonstrates the Department of Justice's commitment to smart enforcement of consumer protection laws, and sends a clear message to businesses that they must comply with the do-not-call rules.”

The U.S. accused Dish of violating the federal Telephone Consumer Protection Act and the Telemarketing Sales Rule by phoning people on do-not-call lists and using recorded messages. The government called Dish “a serial telemarketing violator'' in court papers.

The federal consumer act allows damages of $500 a call or text, which can be tripled for violations made knowingly. The sales rule allows penalties of $11,000 for each violation before Feb. 9, 2009, and $16,000 per violation after that.

The states had initially sought more than $23 billion in damages, but lowered the request following the initial phase of a non-jury trial held by Myerscough last year. California asked for $100 million and Ohio for $10.4 million, while North Carolina and Illinois didn't specify amounts in a March 2016 filing.

The case is U.S. v. Dish Network LLC, 09-cv-03073, U.S. District Court, Central District of Illinois (Springfield).

--With assistance from Scott Moritz

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Wollman at ewollman@bloomberg.net, Peter Blumberg, Joe Schneider