Do Not Call

DO NOT CALL….A government agency has been detected doing its job:

DirecTV Inc. will pay $5.34 million to settle charges that its telemarketers called households listed on the national do-not-call registry to pitch satellite TV programming, Federal Trade Commission officials said Tuesday.

….The FTC arrived at the $5.34 million penalty by multiplying the $11,000 maximum it can assess per call by the 485 days between the onset of consumer complaints about DirecTV and when the company entered settlement talks, said Allen Hile, acting associate director of marketing practices for the FTC.

Good for the FTC. At the same time, though, it’s worth noting that they apparently received 1.4 million complaints about DirecTV, so that’s only about four bucks per complaint. And at a rough guess that fewer than one in ten people complains when they get a call, that’s less than 40 cents per illegal call. And it took DirecTV 485 days just to start talking to the FTC, let alone settle. And I’ll bet they raked in more than $11,000 per day in business from their illegal calls during the period they were telling the FTC to pound sand.

Maybe crime pays after all.

UPDATE: Hmmm. I think I’d like to revise and extend my remarks. In response to a question in comments, here’s a rough guess at how much money DirecTV made from their illegal calling:

  • If they got 1.4 million complaints, they probably made ten times that many illegal calls. So figure 14 million illegal calls. [UPDATE: Apparently this figure is wrong. See below.]

  • Assume they converted .2% of those calls into new customers. That 28,000 new customers.

  • How much revenue do they get from each new customer? Some sign up for more services than others, while some drop out after a few months. Taking a guess at their churn rate, I figure the average new customer generates at least $1,000 in marginal earnings over five years.

  • So: total five-year revenue stream from illegal calls = $28 million. Total fine from FTC = $5.34 million.

  • Even if I’m overestimating some of this stuff ? and I’ll bet I’m not ? that’s still a pretty good ROI. Looks like the FTC rolled over big time on this.

In other words, crime does pay, as long as you’re a big corporation with a top notch legal staff. But we knew that already, didn’t we?

UPDATE 2: CNN has corrected its story to say that the FTC received “thousands” of complaints against DirecTV, not 1.4 million. So forget all this. Maybe a $5.34 million fine wasn’t so bad after all.