As evidence of the Federal Trade Commission’s (“FTC”) increased zeal to stem the tide of unsolicited commercial text message marketing, the United States District Court for the Northern District of Illinois recently approved and entered a heavy-handed final judgment against Rentbro, Inc. and its principals. Among other things, the judgment compels Rentbro to pay to the FTC all funds held in two frozen bank accounts which purportedly contain all money received by Rentbro as part of its alleged text message spamming campaign. Furthermore, Rentbro and its principals are permanently enjoined from ever “making or initiating, or procuring the transmission of, or assisting others in making or initiating, or procuring the transmission of, unauthorized or unsolicited commercial text messages to mobile telephones or other wireless devices.”
The FTC Action
On February 28, 2013, the FTC filed an action against Rentbro and its principals in the Northern District of Illinois. The two-count complaint alleged that the defendants violated various provisions of the Federal Trade Commission Act (“FTC Act”) by sending at least 42.5 million unsolicited commercial text messages. The FTC alleged that the unsolicited text messages deceptively offered consumers “free” third-party merchant gift cards that, in reality, sent consumers through a maze of third-party websites (for more on the FTC’s efforts to crackdown on “free gift card” offers, see Another FTC Lawsuit Brought Against Marketers). These websites required consumers to enter personally identifiable information (such as full consumer name, address and telephone number). The complaint states that consumers were usually then required to complete over ten offers, in some cases incurring charges. The FTC concluded that “[i]n most instances, it is not possible for a consumer to obtain the promised free merchandise without spending money.”
The Judgment
The defendants never answered the complaint. Instead, after the Court issued a temporary restraining order against the defendants, Rentbro’s principals, apparently unrepresented, agreed to enter into a stipulated preliminary injunction in March of this year. Thereafter, the principals agreed to enter into the stipulated final judgment entered by the Court on September 13, 2013. Pursuant to the judgment, neither Rentbro, nor its principals, may send any unsolicited commercial text messages in the future. Additionally, they are prohibited from including misrepresentations in any further commercial advertisements.
A suspended judgment, contingent on verification of certain financial representations made by the defendants, has been entered. The judgment also prohibits the defendants from selling or sharing any consumer information obtained from text message spamming (for more on sharing of consumer information, see New Mobile App Guidance Released for the Collection, Use and Sharing of Consumer Information). Pursuant to the judgment, the defendants must also submit an annual compliance report to the FTC for the next 20 years.
Protect Yourself Against FTC Act Claims
In a recent press release, the FTC noted that this is the second settlement resulting from “an enforcement sweep initiated earlier this year against 29 defendants.” (see The FTC and State Attorneys General Cracking Down). Clearly the FTC is cracking down on text message advertising that it considers spam (see FTC and Text Message Marketers).
If you are interested in learning more about this topic, or if you have been served with legal process relating to the FTC Act, the Telephone Consumer Protection Act (see New TCPA Rules Effective October 16, 2013) or CAN-SPAM Act (see Remote Images May Violate the CAN-SPAM Act), please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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