Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC sues alleged sweepstakes scammers, (Sep 23, 2013)

By Jody Coultas, J.D.

The FTC has been granted an ex parte temporary restraining order in an action against the operators of an alleged sweepstakes scam by the federal district court in Los Angeles. The FTC filed a complaint last week, seeking to permanently enjoin Applied Marketing Sciences LLC and others from engaging in illegal practices and to obtain relief for alleged victims (FTC v. Applied Marketing Sciences, LLC, Case No. CV13-06794 CAS (CWX), FTC File No. 1323106).

Applied Marketing and others allegedly mailed over 3.7 million personalized letters to millions of consumers telling them that they had won a large cash prize that could be collected by sending in a small fee of approximately $20 to $30. The letters stated that the prize was guaranteed if the consumer paid the fee, and created a sense of urgency by stating that it was a limited-time offer. The letters were sent over a period of two years to 156 countries.

On the back of the letters, there was wording that directly conflicted with the bold claims of major winnings. The letters stated that the recipient had not won, and that the defendants did not sponsor sweepstakes. Rather, the letters provided consumers with a list of available sweepstakes. Consumers that failed to see or understand this language sent over $11 million to the companies. Most victims were over the age of 65. The FTC alleged that the language did not appear designed to correct deceptive statements, but was mainly an attempt to provide a defense to law enforcement action.

The court temporarily stopped the illegal conduct, froze the operation’s assets, and appointed a receiver over the corporate defendants while the FTC moves forward with the case.

Companies: Applied Marketing Sciences, LLC

News: ConsumerProtection FederalTradeCommissionNews