FTC Brings Suits Against Text-Message Senders, Personal Info Collection Websites
The FTC sued alleged text-message spammers and personal data collection website operators, it said Thursday. The U.S.-based defendants named in the eight actions allegedly sent at least 180 million unsolicited text messages alerting recipients that they had won free $1,000 gift cards to stores like Walmart and Best Buy, said Steve Baker, director of the FTC’s Midwest Region, during a press call. The text messages directed recipients to websites where they would have to enter contact and personal information and provide credit card information before they could receive the “free” gift cards, he continued. Baker said the agency received 20,000 complaints about these messages, with additional complaints received by the FCC.
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Sending unsolicited text messages “is itself illegal” under the Telephone Consumer Protection Act, and the text messages contained deceptive information by promising free gift cards but then requiring recipients to enter sensitive personal, contact and financial information, Baker said. The websites asked for email addresses and personal information -- “even stuff like, ‘are you a diabetic'” -- before asking for credit card information to sign recipients up for subscriptions or credit reports, he continued. “Then you have to sign up three friends to do the same thing.” If a user does provide online contact information, “you're going to be subjected to spam email,” Baker said; agency employees registered with the websites and immediately began receiving new spam emails. According to the agency’s release (http://1.usa.gov/13HR59V), the information collected was then sold to third parties.
These unsolicited text messages “collectively cost consumers millions of dollars,” Baker said. According to data from the wireless companies, 12 percent of consumers that use text messaging either pay per message or have to pay more when they go over the number of messages allotted in their cellphone plans, he said. The alleged spammers didn’t seem to target anyone specifically, Baker said: “They're really kind of hitting everybody,” including cellphone users in Canada. Consumers can block text messages through their wireless providers, but they have to block messages from specific numbers, said Steven Wernikoff, an FTC attorney based in Chicago: “The problems with these scams is that the [phone] numbers change so regularly.”
Baker said the agency was unsure if any recipients of these messages actually received a gift card, but “we do know that if any consumer gets that far and actually gets a gift card, it isn’t free.” The FTC is not currently considering creating a “Do Not Text” registry, and such a registry would likely be ineffective in cases like these, Baker continued. Companies like these “don’t care about [the] Do Not Call [Registry], and they regularly violate it,” he said. “I'm not sure [a Do Not Text registry] would stop them."
Consumers who receive such a text message should “obviously delete it and don’t click on any sort of link contained in it,” and they should forward the text to 7726, a number run by wireless providers to monitor spam text messages, Baker said. Often, text messages will encourage recipients to send “STOP” to stop the texts, but consumers should not do that, he said; the agency has found with other cases that consumers who send “STOP” are instead signed up for “a premium text message service."
The suits include four cases filed in the U.S. District Court in Chicago: one against Ecommerce Merchants, Cresta Pillsbury, Jan-Paul Diaz, Joshua Brewer and Daniel Stanitski, one against Rentbro, Daniel Pessin and Jacob Engel, one against Jason Cruz and one against SubscriberBASE Holdings, SubscriberBASE, Jeffrey French, All Square Marketing, Threadpoint, PC Global Investments, Slash 20, Brent Cranmer; Christopher McVeigh and Michael Mazzella. Multiple defendants in the final case are represented by Venable, which has represented online behavioral advertising entities (CD Jun 15/10 p10). The FTC also filed two suits in the U.S. District Court in Houston: one against Verma Holdings and Rishab Verma and one against AdvertMarketing, Scott A. Dalrymple and Robert Jerrold Wence. The FTC filed a suit against Henry Kelly in the U.S. District Court in Atlanta and a suit against Sandra Skipper, Kevin Beans, Dakota Geffre and Phillip Flora -- “who was barred in 2011 from sending spam text messages,” according to the agency -- in the U.S. District Court in Los Angeles. Defendants and their lawyers either could not be reached for comment or did not respond to requests for comment.
This action makes it “clear that the FTC is taking a hard look at the practices of data brokers,” said John Simpson, director of Consumer Watchdog’s Privacy Project. “This appears to end a deceptive practice by some of the more sleazy operators.” Simpson said the industry surrounding data brokers is “extremely opaque.” The FTC is working to bring clarity to the activities of data brokers, and “I expect when they find unfair and deceptive practices like in this case, they will launch vigorous enforcement actions,” he said. Michael Altschul, senior vice president of CTIA, said the group is “pleased that the FTC continues to crack down on SPAM text messages. CTIA’s carrier members are constantly monitoring their networks for SPAM text messages so they aren’t sent to their wireless customers. Unfortunately, spammers continue to evolve to try to get by the carriers’ filters.”