In 2011, the Federal Trade Commission (“FTC”) filed a complaint against text message marketer Phil Flora alleging that he had sent millions of deceptive text messages to consumers in violation of the FTC Act. The FTC’s complaint alleged that Mr. Flora used a network of affiliate marketers to deliver unsolicited text messages advertising deceptive mortgage loan modifications. Mr. Flora and the FTC settled the case in 2011 and, pursuant to the terms of the settlement agreement, Mr. Flora was permanently banned from sending deceptive text messages in the future.
Text Message Marketer Found to Be in Civil Contempt
Despite the 2011 settlement, in 2013, the FTC alleged that Mr. Flora was operating a similar deceptive text message marketing scheme. According to the FTC, Mr. Flora used a network of affiliate marketers to deliver unsolicited text messages offering free merchandise to consumers, such as Wal-Mart and Best Buy gift cards. However, none of the merchandise actually was free. In fact, consumers who clicked on any of the links in the subject text messages were taken to deceptive websites that requested the consumers’ personal information and required them to sign up for trial offers to “qualify” for free merchandise. In most instances, the trial offers included monthly recurring charges that were billed to the consumers’ credit cards.
The FTC has stated on several occasions that it takes violations of settlement orders very seriously and that “no matter how much scammers may try to hide their involvement, we will work to uncover their role and ensure they give up their ill-gotten gains.”
True to its word, the FTC came down hard on Mr. Flora and obtained an order and default judgment from a federal court in California finding Mr. Flora in civil contempt of the 2011 settlement agreement. In addition to permanently banning Mr. Flora from sending deceptive text messages in the future, the order has imposed a default judgment of almost $150,000 against him.
How to Avoid a Text Message Lawsuit
In light of the FTC’s massive crackdown on commercial text message spam, Mr. Flora’s case should serve as a cautionary tale. For peace of mind, as well as to save the potential substantial costs of litigation, a penny of prevention is worth a pound of cure. The best way to succeed in any FTC action is to never appear on the FTC’s radar screen in the first place.
Are you currently working on a regular basis with experienced Internet marketing counsel, versed in the intricacies and nuances of the FTC Act, Telephone Consumer Protection Act (“TCPA”) and online marketing law? As referenced above, if you are served with a lawsuit, the ability to demonstrate that you worked with counsel to implement practices and procedures to prevent the sending of unlawful commercial text messages should go a long way toward significantly reducing your potential damages.
This topic should be of interest to any company or individual engaging in mobile marketing.