Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Marketers settle FTC charges of illegal text messaging scheme, (Feb 28, 2014)
Organizations Mentioned:Bureau of Consumer Protection | CPA Tank, Inc. | Eagle Web Assets, Inc.
By Linda O’Brien, J.D., LL.M.
The FTC announced today that a group of affiliated marketers has agreed to settle FTC charges that they took part in a scheme that bombarded consumers with tens of millions of spam text messages that lured consumers with phony gift card offers, and then directed recipients to deceptive websites.
The scheme participants in the case—operating through two Chicago-based companies, CPA Tank, Inc. and Eagle Web Assets, Inc.—are the latest to settle FTC charges as a result of the agency’s crackdown on deceptive affiliate marketing on the Internet.
According to its complaint (FTC v. CPA Tank, Inc., File No. 132-3183), the FTC charged that CPA Tank and Eagle paid affiliates to send out the spam text messages promoting supposedly “free” merchandise, such as $1,000 gift cards for major retail stores.
People who clicked on the links in the text message did not receive the promised items, the FTC charged. Instead, they were taken to websites that requested they provide personal information and sign up for numerous additional offers—often involving other purchases or paid subscriptions. The FTC alleged the defendants’ deceptive and unfair practices violated the FTC Act.
The final order prohibits CPA Tank, Eagle Web Assets, and their respective principals, Vito Glazers and Ryan Eagle, from making misrepresentations in marketing any good or service, including misrepresentations that a product or service is “free” or without cost or obligation.
It also requires defendants, if they offer products or services in the future, to disclose all material terms and conditions of such offers, and prohibits them from making, or initiating the transmission of, unauthorized or unsolicited commercial electronic text messages to mobile telephones or other wireless devices.
The settlement imposes a $200,000 judgment against the defendants, most of which is suspended, due to their inability to pay. It requires them to turn over $30,000 in cash plus the proceeds from the sale of their automobiles.
“Sending illegal text messages will get you in hot water with the FTC,” said Jessica Rich, Director of the FTC’s Bureau of Consumer Protection. “You can’t avoid responsibility by hiring a third-party to send them for you.”
On February 18, 2014, the operators behind one of these websites agreed to pay $2.5 million to settle FTC charges (FTC v. SubscriberBASE Holdings, Inc., File No. 122- 3137). Another website operator, Acquinity Interactive LLCO, was charged by the FTC in July 2013. In addition, the FTC sued a number of affiliates responsible for many of the underlying text messages in a number of enforcement cases in March 2013.
The Commission’s vote authorizing staff to file the stipulated final order was 4-0.
Companies: CPA Tank, Inc.; Eagle Web Assets, Inc.
News: ConsumerProtection Privacy FederalTradeCommissionNews