Saturday, Sept. 21, 2013 | 11:27 a.m.
An appeals court has ordered a federal judge in Las Vegas to impose harsher penalties on a firm cited for fraud in its telemarketing business.
The U.S. Ninth Circuit Court of Appeals said U.S. District Judge Philip Pro used the wrong standard when he ordered Publishers Business Service to pay $191,219 in damages.
The Federal Trade Commission, which was granted a pretrial summary judgment against the company, is seeking $34.4 million to refund to the victims of the illegal actions.
The commission sued the business, — Ed Dantuma Enterprises — and six of its officers who are all Dantuma family members. It alleged "widespread deceptive and abusive telemarketing practices."
The commission said Publishers Business would contact consumers by phone about magazine subscriptions, "disguising their sales pitch as a survey." Then company representatives offered "free or low-cost" magazine subscriptions.
"They then billed consumers hundred of dollars for the purportedly free subscriptions‚ and told them they entered into a binding non-cancellable" verbal contract to buy the subscriptions, the federal commission said.
The company was also charged with harassing consumers at work and at home in an attempt to get them to pay the subscriptions and "engaged in other threatening conduct over the phone," the agency said.
The appeals court said Judge Pro "applied the wrong legal standard" when he decided the penalty should be based on the profits of the company rather than losses of consumers.
It sent the case back to Judge Pro for further hearings.
The decision Friday said if the injured consumers cannot be found, the district court should find another solution to benefit the consumers.