Targeting the senders of 180 million illegal text messages, the Federal Trade Commission announced eight enforcement actions against 29 defendants who sent spam messages offering free gift cards.
The messages “are more than just a nuisance,” said FTC Midwest Region Director Steve Baker at a press conference announcing the actions. “Collectively, they cost people who receive them millions in higher charges on cellphone bills and the people who respond to them also can become victims to scams.”
In the complaint against AdvertMarketing, for example, the agency alleged that the company inundated 30 million consumers with texts like “You won a free $1000 Walmart Gift Card, enter code ‘FREE’ at http://wingc.biz/wm@.”
But “even if [consumers] get the gift card, it isn’t free,” Baker charged. Consumers who clicked on the link in the messages were taken to a Web site where they were required to provide pages of information that included their e-mail addresses (leading to e-mail spam, Baker said), their credit card information for “free” trial offers (used to enroll them in continuity plans), their contact info for three friends to receive similar offers, and the answer to questions like “Are you a diabetic?” As consumers were forced to enroll in a continuity plan to obtain a gift card, the “free” scheme constituted a deceptive practice.
Both the message itself and the claims contained in the messages violated federal law, the agency said in complaints against AdvertMarketing and six other affiliate marketers: Superior Affiliate Management, Rentbro, Inc., Jason Q. Cruz, Rishab Verma, Henry Kelly, and Seaside Building Marketing. In the final case, the agency sued SubscriberBASE Holdings, Inc., and related defendants, which the FTC alleged operated the Web sites on which the deceptive schemes were conducted.
At the press conference Baker said the agency received roughly 20,000 complaints about the free gift card text messages. The FTC spent months investigating the texts, but struggled to trace their origin and actually find people to sue. It remains unknown how the defendants acquired the phone numbers they used, and since no particular demographic was targeted, Baker said the selection appears to be random.
All the suits – filed in district courts in California, Georgia, Illinois, and Texas – seek injunctive relief to halt the texts and the freezing of the defendants’ assets. Baker estimated that the defendants collectively made “millions of dollars” from the spam texts.
To read the FTC’s complaints in the enforcement actions, click here.
Why it matters: With another slew of enforcement actions, the FTC has reinforced its focus on the mobile ecosystem. Marketers must not only receive prior, express consent before sending text messages as part of an advertising campaign, they must ensure that any claims within the message itself are not deceptive or misleading.