Text Message Marketers Settle Suit with FTC

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1225932_53183171Last week, two Chicago-based text message marketers, CPA Tank, Inc. and Eagle Web Assets, Inc., settled a case brought against them by the Federal Trade Commission (“FTC”).  The FTC complaint alleged that the text message marketers were part of a scheme that sent millions of unwanted text messages to consumers and used gift cards to lure the consumers to websites that were operated in violation of the FTC Act.

According to the FTC’s complaint, the text message marketers in question used a network of affiliate marketers to deliver unsolicited text messages that supposedly offered free merchandise to consumers, such as Wal-Mart and Best Buy gift cards.  However, according to the FTC, none of the merchandise actually was free.  In fact, consumers who clicked on any of the links in the subject text messages were taken to deceptive websites that requested the consumers’ personal information and required them to sign up for trial offers to “qualify” for free merchandise.  In most instances, the trial offers included monthly recurring charges that were billed to the consumers’ credit cards.

Text Message Marketers Settlement Details

As part of the FTC settlement, the defendant text message marketers agreed to pay $200,000 and to refrain from making further misrepresentations in marketing any other good or service though text message marketing, or otherwise.  Furthermore, the principals associated with each respective defendant were required to sell their respective automobiles and remit the proceeds, along with a $30,000 total aggregate penalty, to the FTC.  The defendants’ principals provided the FTC with sworn financial records demonstrating an inability to pay the total amount and, as such, the FTC agreed to suspend the judgment (with the exception of the $30,000).

This settlement is only a small part of the FTC’s massive crackdown on commercial text message spam.

If you are interested in learning more about this topic or need to review your marketing practices, 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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