Twelve defendants that allegedly operated websites enticing consumers with bogus offers of “free $1,000 gift cards” for major retailers have agreed to pay $2.5 million, the Federal Trade Commission announced Tuesday.
The South Carolina- and California-based defendants allegedly hired marketers to send more than 180 millions spam text messages notifying consumers they had won a free gift card. When in reality, the messages were used as a way to gather and then sell consumers’ personal information to third-party marketers.
According to the complaint, which was first filed in March 2013, when consumers clicked on the link provided in the text message they would be taken to a page to register for the free prize. During the registration process the marketers collected personal information about the consumer to be sold to third parties, the FTC said in a statement.
“This case halts a nationwide operation that took in millions of dollars by promising consumers free gift cards that it never delivered,” Jessica Rich, Director of the Bureau of Consumer Protection, said in a statement. “We’re pleased to stop these unwanted messages and protect consumers’ personal information.”
Under the settlement All Square Marketing, LLC; Threadpoint, LLC; PC Global Investments, LLC; Slash 20, LLC; Matthew Cook, Robert Nicolosi, Christopher McVeigh, and Michael Mazzella are required to pay $1,320,000, while SubscriberBASE Holdings, Inc.; SubscriberBASE, Inc.; Jeffery French and Jason Liester are required to pay $1,180,000.
As part of the settlement, the corporate defendants are banned from being involved in the distribution of unwanted span text messages, as well as from misrepresenting whether a good or service is “free”.
Operators of Phony ‘Free $1,000 Gift Card’ Websites Will Pay $2.5 Million in FTC Settlement [Federal Trade Commission]