A group of defendants accused by the Federal Trade Commission of sending millions of spam text messages to consumers with “free” merchandise offers, followed up by illegal robocalls, will pay almost $10 million to settle the charges.
The “major effort” by the agency targeted the senders of unwanted texts offering links to “free” merchandise or gift cards at major national retailers. Recipients who clicked on the links were taken to websites where they were required to submit personal information, including cellphone numbers. The FTC said the numbers were then sold to marketers who made illegal robocalls or engaged in mobile cramming.
Three groups of defendants reached deals with the agency. According to the FTC, the first group of defendants was responsible for a host of Federal Trade Commission Act violations, that included making deceptive claims about “free” merchandise, sending illegal text messages, and assisting and facilitating robocalls. In addition to payment of $7.8 million, the individuals and corporate entities agreed not to send unwanted text messages or include cramming charges on either landline or mobile phones.
The agreement also prohibits defendants and then affiliates from making future misrepresentations about “free” merchandise and from engaging in illegal telemarketing.
Mobile cramming was the focus for the second group of defendants that allegedly caused unauthorized charges to be placed on consumers’ phone bills. Pursuant to the stipulated final order between the parties, the defendants are prohibited from placing charges of any kind on consumers’ telephone bills and from making any misrepresentations about products or services (including the cost of a product or service or an obligation to pay).
The second group will pay a total of $1.4 million and will obtain the express, informed consent of consumers before billing them for any good or service, the FTC said.
Finally, the third group of defendants, which faced liability for making millions of illegal robocalls, reached an agreement prohibiting future illegal telemarketing. Due to an inability to pay the $8 million judgment, the defendants will pay $100,000 and the individuals will surrender various vehicles and real estate holdings.
To read the complaints and the stipulated final judgments in the cases, click here.
Why it matters: The cases reinforced the agency’s focus on mobile marketing matters and were filed as part of a nationwide FTC 2013 sweep that targeted the senders of text messages offering free gift cards.