Legal battle ends for Oklahoma City telemarketing firm

Thursday, February 24th 2005, 6:10 am
By: News On 6

OKLAHOMA CITY (AP) _ An Oklahoma City telemarketer has settled a lawsuit with the Federal Trade Commission after the company was accused of deceptive sales techniques.

The judgement puts the magazine-selling company out of business and threatens a $39 million judgement if financial information provided by the company is inaccurate.

After eight years of legal wrangling, Diversified Marketing Service Corp. and its president, H.G. Kuykendall Jr., signed an agreement filed in federal court this week that it would not telemarket magazines.

The agency had charged the company practiced deceptive sales techniques. Kuykendall denied the allegations, said his attorney, Stephen Solomon.

The settlement is far from a previous judgment that ordered Diversified Marketing and other companies pay the $39 million outright. That monetary award was set aside by an appellate court.

While monetary damages are not directly awarded, the settlement does leave open the possibility of a follow-up investigation.

The battle between the agency and Kuykendall began in 1996.

The agency sued Diversified Marketing, National Marketing Service Inc., NPC Corporation of the Midwest Inc. and Magazine Club Billings Service Inc. Also included in the civil action were the businesses owners, Kuykendall Jr., H.G. Kuykendall Sr. and C.H. Kuykendall.

The agency said the defendants misrepresented the cost or duration of the subscriptions; charged accounts without authorization; refused to cancel subscriptions; misrepresented consumers' rights to cancel contracts under state law; and threatened consumers' credit ratings.

The agency won a permanent injunction barring the companies from deceptive and unfair sales practices. The companies were ordered to pay $1.5 million.

In January 2002, the agency filed another complaint alleging the companies had violated the injunction. After a hearing in Oklahoma City, U.S. District Judge Vicki Miles-LaGrange held the companies in contempt and ordered the businesses to pay $39 million.

In December 2002, the 10th U.S. Circuit Court of Appeals in Denver set aside the monetary award. In June, the appeals court cited a lack of evidence in dismissing the action against all defendants except Kuykendall Jr. and Diversified Marketing

This week's settlement is the end of contempt proceedings against any of the companies.