September 20, 2018
In February of this year, the Federal Trade Commission (“FTC”) and Missouri State officials brought charges against a network of Kansas City area businesses (“Defendants”) which allegedly had used deceptive sweepstakes and other prize mailers to bilk consumers out of more than $100 million. The complaint alleges that Defendants sent prize notices to consumers, claiming that they had won a prize and, in order to receive that prize, consumers would have to pay an acquisition fee of anywhere from $11.89 to $139.99. Additionally, Defendants sent mailers to consumers, offering cash prizes if they could answer a simple arithmetic question and pay a registration fee of anywhere from $9 to $45. In reality, answering the arithmetic question entered consumers into a contest that had multiple rounds of mathematical puzzles, which required additional fees, and eventually ended with a puzzle that very few people, if any, could solve.
In July of this year, a federal judge had frozen the assets of the Defendants because he believed that the state and federal governments were likely to prevail on the merits of the case. Defendants were back in court last week to ask a federal judge in Kansas City to increase their living expenses from $18,000 a month to roughly $45,000 a month. The judge was not persuaded by their arguments and has ordered the Defendants’ assets to remain frozen.
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