Markets Wired

A group of affiliate marketers has agreed to settle Federal Trade Commission charges that they took part in a scheme that bombarded consumers with tens of millions of spam text messages that lured consumers with phony gift card offers, and then directed recipients to deceptive websites.

The Chicago-based defendants in the case, operating through two companies called CPA Tank, Inc. and Eagle Web Assets, Inc., are the latest to settle FTC charges as a result of the agency’s crackdown on deceptive affiliate marketing on the Internet.

In its complaint, the FTC charged that CPA and Eagle paid affiliates to send out the spam text messages promoting supposedly “free” merchandise, such as $1,000 gift cards for Wal-Mart and Best Buy.

“Sending illegal text messages will get you in hot water with the FTC,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “You can’t avoid responsibility by hiring a third-party to send them for you.”

People who clicked on the links in the text message did not receive the promised items, the FTC charged. Instead, they were taken to websites that requested they provide personal information and sign up for numerous additional offers – often involving other purchases or paid subscriptions.

Earlier this month, the operators behind one of these websites agreed to pay $2.5 million to settle FTC charges. Another website operator was sued by the FTC in July 2013. In addition, the FTC sued a number of affiliates responsible for many of the underlying text messages in a sweep of enforcement cases in March 2013.

The FTC alleged the defendants’ deceptive and unfair practices violated the FTC Act. The final order against CPA Tank, Eagle Web Assets, and their respective principals, Vito Glazers and Ryan Eagle, prohibits them from making misrepresentations in marketing any good or service, including misrepresentations that a product or service is “free” or without cost or obligation.

It also requires defendants, if they offer products or services in the future, to disclose all material terms and conditions of such offers, and prohibits them from making, or initiating the transmission of, unauthorized or unsolicited commercial electronic text messages to mobile telephones or other wireless devices.

The settlement imposes a $200,000 judgment against the defendants, most of which is suspended, due to their inability to pay. It requires them to turn over $30,000 in cash plus the proceeds from the sale of Glazers’ 2007 Bentley automobile and Eagle’s 2006 Range Rover.

Information for Consumers and Business

The FTC has a new blog post for consumers, advising them how to recognize and avoid text-messaging scams, as well as information for businesses on this issue.

The Commission’s vote authorizing staff to file the stipulated final order was 4-0. The FTC filed the stipulated final order for permanent injunction in the U.S. District Court for the Northern District of Illinois, Eastern Division, and it was entered on February 26, 2014.

NOTE: Stipulated orders have the force of law when signed and approved by the District Court judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.