A group of companies that allegedly promised mobile phone users supposedly free gift cards and electronic devices in a "massive" text-messaging spam operation will pay more than US$9 million to settle complaints from the U.S. Federal Trade Commission.
Many of the unwanted text messages promised free merchandise, including $1,000 gift cards to large retailers or Apple iPads, the FTC said this Wednesday in a press release. After mobile phone users clicked on links, many then received illegal robocalls or unauthorized charges on their mobile phone bills, the agency said.
The text messages contained links to websites that led consumers through a process designed to get consumers' personal information for sale to marketers and to drive them to paid subscriptions for which the defendants received affiliate referral fees, the FTC alleged.
Mobile phone users who clicked on links were often required to complete 13 steps, including signing up to pay for new services and disclosing their job status, income, credit score and medical conditions, before moving ahead with the offers, the FTC said in a complaint filed in an Illinois court. In many cases, people who started the process abandoned it because of the time or cost involved, the FTC alleged.
In most or all cases, it was "impossible for a consumer to qualify for the promised free merchandise" without spending additional money, the FTC said in its complaint.
While the texting campaign promised free items, "the costs to consumers were very real," including unwanted charges crammed onto their phone bills, Jessica Rich, director of the FTC's Bureau of Consumer Protection, said in a statement.
Some of the companies named in the FTC's original July 2013 complaint appeared to be out of business and unavailable for comment.
The settlement covers three groups of defendants.
The first set of defendants, required to pay the FTC $7.8 million, was responsible for sending millions of illegal text messages, and making deceptive claims about "free" merchandise, the FTC alleged. The settlement bans these defendants from sending unwanted text messages and placing any charges on people's telephone bills.
The defendants in this group include Acquinity Interactive, based in Florida; 7657030 Canada; and Revenue Path E-Consulting of India.
The second set of defendants is required to pay the FTC $1.4 million. This group of defendants was responsible for cramming unauthorized charges on consumers' mobile phone bills, the agency alleged. This group includes Polling Associates Boomerang International.
In the third settlement, an $8 million judgment is being suspended due to the defendants' inability to pay, the FTC said. This group was responsible for making millions of illegal robocalls, the agency alleged.
These defendants are required to pay the FTC $100,000, as well as surrender the value of a life insurance policy and proceeds from the sale of a 2013 Cadillac Escalade, two motorcycles, and a real estate holding in Southern California. These defendants include Firebrand Group and Worldwide Commerce Associates, both based in Nevada.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is [email protected]