Millions of text messages promising free gift cards and electronics were the issue in a recent FTC settlement with an affiliate marketer.
According to the agency, Wisconsin-based Jason Q. Cruz was responsible for texts telling consumers they were “selected” for $1,000 gift cards and all they had to do was enter the code ‘FREE’ at a Web site to claim their prize. The scam, which ran for almost one year, also featured texts that recipients won free iPads and gift cards to major retailers, including Best Buy.
When consumers clicked on the link to claim their promised gift card, however, they did not receive their “free” gift. Instead, the promise of a free item was reiterated with prominent displays of company logos on the Web site, and to encourage consumers to act quickly, the sites also featured a counter with a message that only a limited number of the free items remained (such as “15 of 1,000 left”).
Consumers were then taken to a third-party Web site and were required to provide detailed personal information and sign up for multiple trial offers with monthly charges in order to get the free items, the FTC said. A typical consumer had to accept over ten trial offers (many featuring negative-option components), and in most instances it was “not possible for a consumer to obtain the promised free merchandise without spending money.”
Pursuant to the stipulated final order, “serial spammer” Cruz is permanently banned from sending or assisting others in sending unsolicited text messages to consumers. He also may not deceptively present an offer as “free” or mislead consumers about the use of their personal information. All consumer information acquired by Cruz in connection with the marketing of free items and gift cards must be destroyed.
Except for $10,000, the monetary judgment of $185,041.26 was suspended, based on an inability to pay, which the agency said amounted to all the money Cruz earned in connection with the scam.
To read the complaint and stipulated final judgment in FTC v. Cruz, click here.
Why it matters: In an agency crackdown against spam texts, the action against Cruz was one of eight complaints filed across the country last March against the senders of an estimated 180 million unwanted messages. “When scammers use unwanted text messages to entice consumers with deceptive offers, that’s a significant problem,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a press release about the settlement with Cruz. “Banning a serial spammer like Mr. Cruz from sending unsolicited text messages helps the FTC take a huge cut out of scammers’ efforts to target consumers in this way.”