A sweepstakes operation was on the receiving end of an injunction issued by a Florida federal court this week at the request of the Federal Trade Commission.
The defendants—more than one dozen corporate entities and related individuals based in Fort Lauderdale, Florida—operated an international scam that took in over $28 million from consumers in the United States as well as Australia, Canada, France, Germany, Japan, and the United Kingdom, the agency alleged.
Personalized letters were mailed to consumers informing them they had won large cash prizes—upwards of $2 million—and instructing them to send the defendants a fee of $20 to $30 in order to claim them, the FTC said. Consumers were spurred into a “false sense of urgency” with a deadline (typically 10 days) after which they would forfeit their “guaranteed” prizes.
But in reality, consumers won nothing. Only in “dense, confusing language” found on the bottom or the back of the letters did the defendants inform recipients that they were really compiling reports about available sweepstakes and contests, according to the FTC’s complaint. The disclaimers were “unclear and inconspicuous,” and were not designed to alert consumers as to the truth.
In response to a motion filed by the Commission, a federal court judge in Florida froze the defendants’ assets and halted their operations. In addition, four individual defendants were arrested by the U.S. Attorney for the Southern District of Florida. The FTC said it plans to recover compensation for affected consumers and permanently end the illegal practices.
To read the complaint and temporary restraining order in FTC v. Mail Tree, click here.
Why it matters: The mailers had no connection to an actual sweepstakes and despite promising people huge prizes and collecting millions in fees, the defendants “never paid out a dime,” Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, said in a statement.