Text spam promising free Walmart gift cards focus of FTC complaint
By Chantal Tode
March 8, 2013
The FTC initiated an assault against spam text messages, filing complaints against 29 defendants accused of collectively sending more than 180 million unwanted text messages to consumers.
The focus of the crackdown is on messages promising consumers free gifts or prizes, such as gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target. The mobile industry has long taken a proactive approach to preventing spam on its own before now.
“I believe that anything that the FTC is doing to reinforce the rules that are already in place is a benefit to consumers,” said John Styers, vice president at Sumotext, Little Rock, AR.
“With that said, I am not a big fan of the government getting involved,” he said. “We should be in a position to self-govern, and we have done a phenomenal job to date to self-govern. I would prefer that we were able to have those issues brought to the carrier community and addressed through the CTIA or carrier community.”
Text spam grows
While there are consumer best practices documents in place to address how to appropriately send text messaging campaigns, the move by the FTC suggests it thinks these are not enough to deter the practice.
The FTC said that it has gotten tens of thousands of complaints about unsolicited text messages in the past year. Text spam is illegal under the Telephone Consumer Protection Act.
According to the FTC complaints, the defendants sent text messages to random phone numbers, including to consumers who do not have a text message subscription plan, which accounts for up to 12 percent of mobile phone users.
"Text spam is a growing problem but not an inhibitor to running SMS programs,” said Jeff Hasen, chief marketing officer at Hipcricket, New York. “Compared with email spam, this doesn't even register on the impact scale.
With that said, any spam text message is troublesome,” he said. “The reason SMS programs work so well – and more than one third of mobile subscribers in a Hipcricket survey want to join a loyalty club — is that the mobile user is convinced that he or she is in charge.”
The issue of text spam is a concern for legitimate marketers.
While text messages currently enjoy a very high open rate, this could start to diminish if consumers begin receiving too many spam messages.
“Text spam starts to dilute the value of what we have worked so hard to build as a protected marketing platform,” Sumotext’s Mr. Styers said. “We have experienced the pollution of email to the point of it having lost a dramatic amount of relevant value due to the amount of spam that gets through and the junk mail.”
In the eight different complaints filed in courts around the United States, the FTC claims that many consumers had to pay for receiving texts that, when clicked on, took them through a elaborate process requiring them to provide sensitive personal information or pay to subscribe to services to get the supposedly free cards.
The collected information was allegedly sold to third parties for marketing purposes.
Once consumers entered their personal information, they were directed to another site where they had to participate in up to 13 offers to be eligible for their gift card. These offers frequently included recurring subscriptions requiring consumers to provide credit card information.
Consumers who completed all of the offers were told they needed to find three others who would complete the offers before they could get their gift card.
The complaints also target the operators of the deceptive Web sites that hired the text message delivery firms to enable the gift card scams.
The FTC is also pursuing a contempt action against a serial text message spammer who was barred from sending spam text messages in 2011 and is accused of being part of the latest spam texting scheme as well.
The complaints seek restraining orders against the defendants and to get back the money consumers lost.
Some of the names of those named in the complaints include AdvertMarketing, Superior Affiliate Management, Rentbro, Jason Q. Cruz doing business as Appidemic, Rishab Verma or Verma Holdings, Henry Nolan Kelly and Seaside Building Marketing.
“We salute all efforts to catch the bad guys and shut them down,” Hipcricket’s Mr. Hasen said. “It's sad that we can't police ourselves as an industry, but if the end result is no spam and an expanded use of SMS by marketers, the FTC's efforts should be applauded."
Chantal Tode is associate editor on Mobile Marketer, New York
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