The New York Attorney General recently settled allegations with Game Theory LLC that the company was sending fraudulent text messages to consumers about a “secret crush.”
According to AG Eric T. Schneiderman’s office, the California-based company sent text messages claiming that the recipient had a “secret crush” and needed to respond “yes” to the text to find out the person’s identity. But by responding, the recipient also agreed to sign up for a text messaging service to receive dating tips at a cost of $9.99 per month, a charge that was difficult to detect on a wireless bill.
Between May and July 2011 more than 150,000 text messages were sent to New York wireless phones in the scam, sometimes with “secret crush” messages and others like “Someone thinks your [sic] hot!” and “You have 1 unread message,” the AG alleged.
In addition to the fraudulent text message scam, the company also offered an app that allowed users to “morph” or manipulate their personal photos. But the app tricked consumers into joining the monthly service plan when they installed the software, according to the AG’s office.
The company’s schemes constituted deceptive practices in violation of New York State law, the AG said. To settle the charges, Game Theory agreed to exit the text messaging business and pay $500,000 in civil penalties.
“There is no legitimate purpose for scams that deceive New Yorkers, and we will continue the fight to protect people’s privacy and their hard earned money,” AG Schneiderman said in a statement. “As a result of this settlement, Game Theory is out of the texting business for good, and this corporation will be held accountable for its conduct.”
Why it matters: In addition to enforcement actions by the FTC, text message scams are also facing increased legal scrutiny from state lawmakers like the New York AG’s office. Marketers should be mindful that they are subject to both state and federal laws that govern the use of text messages.