Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Alleged spammer agrees to settle FTC charges over “free” i-Phone text messages, (Jul 18, 2013)

By Jeffrey May, J.D.

A Georgia man has agreed to settle FTC charges that he violated the FTC Act by transmitting or arranging for the transmission of over 20 million text messages promoting products and services, including purportedly free merchandise, such as iPhones and iPads. A consent decree settling the allegations was entered by the federal district court in Atlanta yesterday (FTC v. Kelly, LLC, FTC File No. 132 3057, Case No. 1:13-cv-00647, announced July 18, 2013).

Henry Nolan Kelly was the subject of one of a series of FTC complaints announced in March against marketers that allegedly sent millions of spam text messages to consumers with false promises of free gift cards or expensive electronic devices. According to the complaint against Kelly, his text messages falsely represented that the consumer receiving the message had won a contest or had been specifically selected to receive a gift or prize. When consumers linked to third party websites from the messages, the third parties purportedly required consumers to participate in multiple other offers to qualify for the promised free merchandise. Kelly's text messages, however, failed to clearly and conspicuously disclose that consumers would incur expenses or other obligations to obtain the promised free merchandise, the FTC contended.

Unfair Practices. In addition to asserting that the challenged conduct constituted deceptive conduct, the FTC alleged that the defendant's practice of "initiating or procuring the transmission of unauthorized or unsolicited commercial electronic text messages to the mobile telephones and other wireless devices" amounted to an unfair practice in violation of the FTC Act.

Settlement. Under the terms of the consent decree, Kelly is prohibited from having any involvement with the sending of unsolicited or unwanted text messages to consumers. In addition, Kelly is prohibited from misleading consumers about whether they have won gifts or prizes, whether a product is “free,” and from using text messages to do the same. A monetary judgment against Kelly was suspended due to his inability to pay. Kelly has agreed to cooperate with the FTC in future investigations.

News: ConsumerProtection FederalTradeCommissionNews