Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC Targets Senders of Spam Text Messages That Offered Free Gift Cards , (Mar 7, 2013)

By Jody Coultas, J.D.

The Federal Trade Commission has filed complaints against numerous defendants who allegedly sent more than 180 million spam text messages to consumers in an effort to stop affiliate marketers from overwhelming consumers with messages that directed them to websites that falsely promised “free” gift cards, according to an agency news release.

Text messages were sent to random phone numbers, including to consumers who did not have a text message subscription plan. The text messages promised consumers free gifts or prizes, including gift cards worth $1,000 from major retailers. After clicking on the links, consumers were required to provide sensitive personal information, including in some instances health information, before being allowed to continue toward receiving the gift cards. The information was requested under the pretext of being shipping information, but was allegedly sold to third parties for marketing purposes.

Consumers that entered their personal information were directed to another site that required them to participate in a number of “offers” to be eligible for the gift card. These offers frequently included recurring subscriptions that required the consumers to provide credit card information. In other cases, consumers were required to submit applications for credit that would be reflected in their credit reports and possibly affected their credit scores. If a consumer completed all of the “offers,” they were then notified that to get the promised gift card, they had to find three others who also would complete the offers.

The FTC targeted the senders of the unwanted text messages, as well as those who operated the deceptive websites. The senders were paid by the operators of the “free” gift websites based on how many consumers eventually entered their information, while the website operators were paid by those businesses who gained customers or subscribers through the “offer” process. The complaint sought restraining orders against the defendants preventing them from continuing their alleged deceptive and unfair practices as well as preserving and accounting for their assets.

News: ConsumerProtection FederalTradeCommissionNews