Recently, a California federal court has entered into a stipulated order reflecting a settlement between the Federal Trade Commission (“FTC”) and a defendant charged with operating a mail fraud scheme. In September 2016, the FTC filed charges against Defendant Ian Gamberg and two other individuals, alleging that the group conspired to print and mail false prize notifications to hundreds of thousands of mostly elderly individuals, leading these individuals to believe that they had won a cash prize of $1 million or more. These mailers included a request that the individuals return an approximately $25 “fee” to collect their cash prize.
Gamberg, who was allegedly responsible for executing the printing and mailing of the false prize notices, settled with the FTC and has been ordered to pay $1,400 of a deferred $800,000 judgment entered against him. The FTC’s agreement to defer the majority of the judgment is contingent on the truthfulness of Gamberg’s financial disclosures.
Takeaway: Companies engaged in marketing and promotions involving contests and prizes should take care to ensure that print materials truthfully represent the nature of the promotion. The FTC has undertaken an international effort to combat mass-mail fraud and companies should take proper steps to comply with FTC truth-in-advertising regulations.