This Type of Text Could Unknowingly Be Costing You Big Bucks

By Eric Reed

NEW YORK ( MainStreet)-- FREE MSG FROM MAINSTREET!!!!! You have been chosen to test & keep a BRAND NEW iPad for free only today!!

You WON! Go to www.mainstreet.com to claim your free $1,000 gift card RIGHT NOW!

If you've received messages like this, or one of many others, you may have been targeted by the latest ring of text message scammers to get shut down by the FTC.

Last Monday the Federal Trade Commission filed a complaint against a network of scam artists working through messages just like the ones above, although without the friendly MainStreet label to make your day. According to Steve Wernikoff, an attorney with the FTC who signed the complaint, the scam artists sent out tens of millions of text messages similar to the ones above, all offering free gift cards or prizes for costumers willing to visit their websites. However it never turned out to be that easy.

Then the robo-calls started.

"We've alleged that these companies ran websites where consumers were fooled into providing their personal information," Wernikoff said. "That information was later shared with third parties, and the consumers weren't provided with clear or conspicuous notices of what was happening."

Once in the system, the victims were told that they needed to jump through multiple hoops in order to get their prizes. The websites demanded intensely personal information including names, addresses, credit scores and even health data as a part of the process required to qualify for the allegedly free prize. The defendants, according to FTC filings, then collected this data, sold it to third parties and used it themselves for mass-marketing purposes, most notably in bombarding consumers with robo-calls related to home security, satellite television and travel services.

After consumers entered their personal information they were also asked to participate in a series of offers, once again necessary in order to qualify for the increasingly elusive prize. According to Wernikoff this often included over a dozen "special offers," most of which required either an up front payment or created a series of hidden subscriptions with ongoing fees.

In virtually all cases it would have been impossible for the consumers to receive the allegedly free products without spending any money, had there actually been any prizes in the first place.

"Consumers were also told on these websites that they were going to receive a free $1,000 gift card for going to the sites, and that turned out not to be true," Wernikoff said. "We haven't seen an instance where a consumer actually received a free gift card."

The defendants also broke the law by spamming consumers' text messages to begin with. Sending unsolicited, commercial texts is generally banned by the FTC, as consumers typically either pay for each one received or have a monthly cap. This type of spam imposes a real cost on customers; even if it's only 10 cents per individual, by the time a company has sent out tens of millions, the numbers add up.

Unfortunately, while the FTC can shut down this type of illegal activity, it's much harder to make the victims whole.

"This is a tricky case as far as trying to get money back to the consumers," Wernikoff said, emphasizing that the widespread but often minor nature of the injury makes it much harder to compensate victims. Indeed, it's often difficult to even identify who the victims are in a matter like this, although as the lawsuit progresses the FTC anticipates that will become more clear.

The commission also expects to have more information regarding the defendants in this case once discovery is complete. Currently the complaint names marketing firms Acquinity Interactive, Worldwide Commerce Associates, RevenuePath Limited and the Firebrand Group, S.L. of Nevada along with several of their directors and officers. According to Wernikoff, however, the FTC is continuing its investigation to decide whether any further defendants will be named.

More information regarding text message spam is available at the FTC's website here. Still, a good rule of thumb is to just keep it simple: if someone is promising you $1,000 free, there's almost always a catch.

--Written by Eric Reed for MainStreet
Read: Do Cool Sh*t

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