United States:
FTC Settles With A Series Of Defendants For Alleged Spam, Robocalling, And Mobile "Cramming"
17 December 2014
Klein Moynihan Turco LLP
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First Set of Defendants
FTC Complaint:
- The Federal Trade Commission ("FTC") alleged that
this first group of defendants engaged in multiple illegal
acts.
- Specifically, the FTC claimed that defendants: 1) sent
"millions" of illegal text messages; 2) made deceptive
claims involving "free" merchandise; 3) was responsible
for unauthorized charges on mobile phone bills; and 4) assisted and
facilitated in the sending of illegal robocalls.
Settlement:
- This particular group of defendants must pay the FTC $7.8
million.
- Under the terms of the settlement, defendants are banned from
sending consumers unwanted text messages, as well as placing
charges of any type on consumer telephone bills (whether landline
or mobile).
- Further, defendants may not misrepresent whether a product is
free (through text message or webpage), and must make sure that all
of their affiliates abide by the same restrictions.
- The settlement also requires defendants to obtain consumer
express informed consent before billing consumers, and bans
defendants from participating in illegal telemarketing on a
prospective basis.
Second Set of Defendants
FTC Complaint:
- The FTC alleged that this group of defendants was responsible
for cramming unauthorized charges on consumers' mobile phone
bills.
Settlement:
- Under the terms of this settlement, defendants are required to
pay $1.4 million.
- They are banned from placing charges of any type on consumer
telephone bills, and may not make any misrepresentations about a
product or service, including the cost or a consumer's
obligation to pay.
- Further, defendants will be required to obtain a consumer's
express informed consent before billing them for any good or
service in the future.
Third Set of Defendants
FTC Complaint:
- The FTC alleged that this group of defendants was responsible
for making "millions" of illegal robocalls.
Settlement:
- Although the settlement resulted in an $8 million judgment, it
is being suspended due to the defendants' inability to pay,
after they turn over certain of their available assets.
- For instance, defendants are required to pay the FTC $100,000,
as well as the surrender value of a life insurance policy and
proceeds from the sale of the following items: a 2013 Cadillac
Escalade, two motorcycles, and real estate in Southern
California.
- The settlement also bans the defendants from engaging in any
future illegal telemarketing.
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Take Away:
- These massive settlements reflect the FTC's continuing
efforts to prevent the sending of deceptive and unwanted text
messages, cramming and illegal robocalling.
- Companies who market products or services via mobile devices
must pay close attention to applicable mobile marketing guidelines,
rules, laws and regulations.
- As we can see from the FTC's efforts, federal regulators
are working to protect consumers and to ensure that all marketing
entities are in compliance with applicable law.
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