US FTC cracks down on text spam

Offers of free gift cards came in illegally sent text messages and contained deceptive claims, the agency says

The U.S. Federal Trade Commission has filed eight complaints against companies allegedly involved in sending unsolicited text messages offering free gifts or gift cards, with the agency alleging the defendants have sent 180 million spam texts.

The agency knows of no consumers who have actually received gift cards after answering multiple questions and clicking through multiple Web pages, officials said Thursday. The so-called free gift cards are not free, because consumers would have to pay shipping and handling costs, said Steve Baker, director of the FTC's Midwest region.

"Over the last year or more, cellphones have been bombarded with text messages telling us we won $1,000 gift cards," Baker said during a press conference. With the lawsuits, filed across the country in recent days, "hopefully, we're going to make a real dent in the spam text problem," he added

Sending unsolicited text messages is illegal under U.S. law, FTC officials said. The defendants also engaged in deceptive advertising in violation of FTC rules, they said.

The lawsuits, which have 29 defendants, target seven operations the FTC accuses of sending text message advertisements and one website the commission says hired text marketers to send the messages. Other defendants are officers at those companies.

In the past year, the FTC has received 50,000 complaints about spam texts and 20,000 complaints about text spams advertising free gifts, FTC officials said. The text messages targeted by the FTC's complaints include gift cards for retailers including Wal-Mart and Best Buy and offers for free electronic devices.

About 12 percent of mobile phone subscribers have been hit with extra charges for the spam texts, FTC officials said.

Phone owners who clicked on the links in the text messages were taken to a "confusing and elaborate" process requiring them to provide sensitive personal information, including illnesses they have, to apply for credit, or pay to subscribe to services in order to get the supposedly free gifts, the FTC said.

After consumers entered their personal information, they were directed to another site and told they would have to participate in a number of offers to be eligible for their gift card, the FTC said. In some cases, consumers were obligated to sign up for as many as 13 offers, some of which included recurring subscriptions the consumers had to pay for. If a consumer navigated all the offers, they were told they had to find three friends to sign up before they could get their gift card, the FTC said.

The offers are, "in a word, garbage," Charles Harwood, acting director of the FTC's Bureau of Consumer Protection, said in a statement.

In addition to the other court cases, the FTC is pursuing a contempt of court action against alleged serial text spammer Phil Flora, who was barred in 2011 from sending spam texts. The FTC accused Flora of being part of this spam operation.

Flora's former lawyer said he couldn't comment on the current allegations.

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 e-mail address is grant_gross@idg.com.

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Tags mobileregulationinternettelecommunicationMail3g4gU.S. Federal Trade CommissionInternet-based applications and servicesCharles HarwoodSteve BakerPhil Flora

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Grant Gross

IDG News Service
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