Texting Scammers to Pay $10 Million to Settle FTC Suit
Three sets of companies accused of bombarding millions of consumers with texts that set them up for scams of all sorts -- including unauthorized cell phone charges, illegal telemarketing calls and fake offers for free gift cards -- agreed to pay $10 million to settle government charges, the Federal Trade Commission said on Wednesday.
The scam involved sending texts that enticed consumers to sign up for what purported to be an offer to get a gift card, typically for $1,000, from major retailers including Best Buy (BBY), Walmart (WMT) and Target (TGT). Instead, those who took the bait were led down a path that cost many of them money and caused most of them a lot of annoyance.
To qualify for the supposed gift cards required providing a lot of personal information. Those details were typically sold to marketing companies that tried to sell subscription services, the FTC said.
"The operators of this scam bombarded consumers for months with deceptive text messages offering 'free' items, but the costs to consumers were very real -– including the misuse of their personal information to cram unwanted charges on their phone bills," said Jessica Rich, director of the FTC's Bureau of Consumer Protection.
The FTC's announcement didn't say if consumers who lost money would be compensated.
The bulk of the settlement is to be paid by one of the groups of defendants. Acquinity Interactive; 7657030 Canada 1; Garry Jonas; Gregory Van Horn; Revenue Path E-Consulting; Revenuepath; and Sarita Somani, were accused of sending the text messages and cramming phone bills with unauthorized charges. They are required to pay $7.8 million.
Polling Associates Inc. and Boomerang International and its principals must pay to $1.4 million to settle charges for their role in alleged cell phone bill cramming.
The last group, which allegedly made millions of illegal robocalls, had an $8 million judgment suspended due to its inability to pay. Firebrand Group, Worldwide Commerce Associates and Matthew Beucler instead had to pay $100,000 and surrender assets including a Cadillac Escalade, two motorcycles and a piece of property in California.