FTC cracks down on text message scams

You might have received one of these bogus text-messages yourself. An odd text stating that you have won a gift card or prize from a familiar company, from an unrecognized phone-number. This is just one of the latest spam tricks that people have been deceived by, and the FTC isn’t taking the illegal practice lightly.
According to the FTC, there are eight different complaints filed in courts throughout the United States, where the FTC has charged 29 defendants with collectively sending more than 180 million unwanted text messages to consumers. Not only are these defendants trying to coerce personal information from the recipient, but in many cases the victims are even charged for each text message sent to them.
In many cases the “free gifts” include merchandise or gift-cards from (Best Buy, Walmart and Target) with prizes ranging from $50 to $1,000. After clicking on the link in the text, victims would be asked to give out personal information to claim their prize. “Today’s announcement says ‘game over’ to the major league scam artists behind millions of spam texts,” said Charles A. Harwood , Acting Director of the FTC’s Bureau of Consumer Protection. “The FTC is committed to rooting out this deception and stopping it. For consumers who find spam texts on their phones, delete them, immediately. The offers are, in a word, garbage.”
In the cases mentioned below, The FTC targeted defendants who sent the unwanted text messages, as well as those who operated the deceptive websites that the texts linked to. The FTC is currently seeking restraining orders against the defendants preventing them from continuing their alleged “deceptive and unfair practices” as well as preserving and accounting for their assets. According to the FTC, after personal information is received by the victim, that information would then be sold to third parties for marketing purposes or illegal activity. In order to get to their “free prize” victims would have to sign up for affiliate “offers” to be eligible for their gift card. In some cases, consumers were obligated to sign up for as many as 13 of the offers. Many times credit-card information, mailing addresses and other personal information was needed to sign up for each offer.
Often times the victims were actually submitting applications for credit, which could negatively affect their credit scores. The FTC claims that the operators of these sites violated the FTC Act by failing to tell consumers about all of the conditions attached to the “free” gift, including the possibility that “consumers would actually be required to spend money to receive the gift”, which many times was the case. According to the FTC, the defendants who sent the text messages were paid by the operators of the “free” gift websites based on “how many consumers eventually entered their information”. The operators of the free gift websites were being paid by businesses who gained customers or subscribers through the “offer” process.
The Commission vote authorizing the staff to file the eight complaints was 4-0-1, with former Chairman Jon Leibowitz not participating. Seven complaints were filed against the alleged senders of the unsolicited text messages containing deceptive promises of free gifts and prizes:

  • Superior Affiliate Management, a case against five defendants: Ecommerce Merchants, LLC (also doing business as Superior Affiliate Management); Cresta Pillsbury , Jan-Paul Diaz , Joshua Brewer and Daniel Stanitski . This case was filed in U.S. District Court for the Northern District of Illinois in Chicago.
  • Rentbro, Inc., a case against three defendants: Rentbro, Inc., Daniel Pessin and Jacob Engel . This case was filed in U.S. District Court for the Northern District of Illinois in Chicago.
  • Jason Q. Cruz , a case against one defendant, Jason Q. Cruz (also doing business as Appidemic, Inc.) This case was filed in U.S. District Court for the Northern District of Illinois in Chicago.
  • Rishab Verma, a case against two defendants: Verma Holdings, LLC and Rishab Verma. This case was filed in the U.S. District Court for the Southern District of Texas in Houston.
  • AdvertMarketing, a case against three defendants: AdvertMarketing, Inc., Scott A. Dalrymple and Robert Jerrold Wence . This case was filed in the U.S. District Court for the Southern District of Texas in Houston.
  • Henry Kelly , a case against one defendant, Henry Nolan Kelly . This case was filed in the U.S. District Court for the Northern District of Georgia in Atlanta.
  • Seaside Building Marketing, a case against four defendants: Phillip Flora , Sandra Skipper , Kevin Beans and Dakota Geffre (all of whom are also doing business as Seaside Building Marketing Inc. and SB Marketing). This case was filed in the U.S. District Court for the Central District of California in Los Angeles.

One complaint was filed against the alleged operators of the deceptive websites to which consumers were directed by the spam text messages:

  • SubscriberBASE Holdings, Inc., a case against ten defendants: SubscriberBASE Holdings, Inc.; SubscriberBASE, Inc.;Jeffrey French ; All Square Marketing, LLC; Threadpoint, LLC; PC Global Investments, LLC; Slash 20, LLC; Brent Cranmer; Christopher McVeigh (also doing business as CMB Marketing, Inc.) and Michael Mazzella (also doing business as Mazzco Marketing, Inc.). This case was filed in U.S. District Court for the Northern District of Illinois in Chicago.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. The cases will be decided by the court.
image via flicker @brianac37

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