SMS Marketer Settles FTC Charges He Sent Deceptive, Unwanted Messages
The Federal Trade Commission has secured a stipulated judgment against a marketer who allegedly sent millions of deceptive text messages. The enforcement action is notable for the FTC’s suggestion that sending text messages without consent contributes to or constitutes a violation of the unfairness prong of Section 5 of the FTC Act, which prohibits unfair and deceptive practices. The FTC reasoned that under the terms of their wireless service plans, recipients of the spam texts may have been required to pay for the unwanted messages and that this created an unavoidable harm with no countervailing benefit. To date, the vast majority of text message litigation and enforcement actions have been brought under regulations issued by the Federal Communications Commission, without FTC involvement.
The FTC’s complaint also alleged that Jason Cruz d/b/a Appidemic, Inc. sent text messages to millions of people, informing them that they had won a contest or been selected to receive a gift or prize. The messages contained links to websites that required the consumers to provide personal information or purchase products or services, often with recurring fees, to qualify for the promised free merchandise. The FTC found that sending these messages constituted deceptive acts and practices under Section 5.
As part of the settlement, the defendant is ordered to pay over $185,000 (the proceeds of the scheme), though all but $10,000 of the monetary judgment is suspended based on Cruz’s inability to pay the full amount. Cruz is also required to destroy any consumer information he obtained through this operation.