Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Alleged Affordable Care Act spammer to settle FTC charges for $350K, (Aug 12, 2014)

By Greg Hammond, J.D.

An alleged email spammer and his company, Kobeni, Inc., have agreed to pay $350,000 to settle FTC charges they violated the FTC Act by sending out deceptive emails prior to the rollout of the Patient Protection and Affordable Care Act (ACA). The purported email messages, which were sent out as early as May 2013, claimed that consumers would be violating federal law if they did not immediately click on a link and enroll in health insurance (FTC v. Kobeni, Inc., File No. 132 3273, Case No. 0:14-cv-60143-KMM).

Email messages. According to the complaint, the emails at issue contained messages stating: “Today is the deadline to make your election or be in violation of federal law”; “Effective Monday (08-05-13) health coverage is REQUIRED BY LAW”; “Why is this mandatory? New Federal Law signed by the President made it mandatory for all U.S. residents to have active coverage. You will be in violation and face penalties if you do not elect”; “Final Warning – Your [sic] Breaking a Federal Law If You Don’t Have Coverage”; among others. However, when consumers clicked on links within the email messages, they were sent to websites containing advertisements for a variety of products and services, including insurance. The complaint also alleged that Kobeni was paid by website operators when consumers would click on advertisement links. Consequently, the Commission charged that Kobeni engaged in deceptive acts or practices, in violation of Section 5(a) of the FTC Act.

Settlement. In addition to the $350,000 monetary judgment, the stipulated order prohibits Kobeni from misrepresenting or assisting others in misrepresenting: (1) that consumers will violate federal law if they do not select health insurance by a specific date; (2) that the law requires consumers to select or purchase a good or service; (3) the total cost to purchase, receive or use a good or service; (4) any material restrictions, limitations, or conditions to purchase, receive, or use a good or service; (5) any material aspect of the performance, efficacy, nature, or central characteristics of a good or service; or (6) any material aspect of the nature or terms of a refund, cancellation, exchange, or repurchase policy for a good or service. In addition, Kobeni is prohibited from disclosing, selling, or benefitting from consumer information, and must destroy such information in all forms within 30 days of the written direction to do so from the Commission.

Companies: Kobeni, Inc.

News: ConsumerProtection FederalTradeCommissionNews