An Internet marketer accused by the Federal Trade Commission of sending millions of deceptive spam messages offering consumers a free iPhone has reached a settlement with the agency.
Henry Nolan Kelly, who allegedly sent more than 20 million texts to consumers nationwide, agreed to a suspended judgment of $60,950 and a ban on sending unsolicited text messages. He is also prohibited from misleading consumers about “free” product offers and whether they have won a free gift or a prize. A typical text read “iPhone 5 Confirmation Test and keep an iPhone 5 http://www.iappletestandkeep.com/” or “You are selected to Test & Keep Unreleased iPhone 5. Go to: http://www.iappletestandkeep.com/iphone5.php& Enter Code: 4190 Code valid 24 hrs.”
According to the FTC, consumers who clicked on links in the unwanted text messages were taken to Web sites where they were required to submit substantial personal information, including their names, addresses, phone numbers, and dates of birth. In some instances, consumers had to make a purchase or pay for a subscription to be eligible for the “free” electronic devices, the agency said. Operators of the Web sites paid Kelly and other affiliates based on the number of consumers that clicked on the link and entered their information.
Some recipients had their monthly allotment of text messages lowered or depleted by Kelly’s messages. Others were forced to pay a fee for the text under the terms of their wireless service plans.
The suit against Kelly in Georgia federal court was one of eight complaints filed by the agency against a total of 29 defendants that collectively sent more than 180 million text messages to consumers. In addition to offers for free tech products, defendants promised gift cards to major retailers.
By failing to inform consumers about the many conditions attached to the “free” gift – such as the need to actually spend money – Kelly and the other defendants violated the Federal Trade Commission Act, the agency said.
To read the complaint and the stipulated final order in FTC v. Kelly, click here.
Why it matters: Despite the settlement, the agency’s efforts to crack down on unwanted texts continue. Just days later, the FTC announced a new suit with almost identical allegations, involving defendants offering “free” gift cards and electronics to consumers who were then required to provide personal information or sign up for subscriptions.