Cell Phone Spam Doesn't Pay, FTC Says

The Federal Trade Commission Thursday announced a crackdown on spam text message senders and warned consumers to ignore offers for free gift cards or prizes that arrive in their cell phone inbox.

In eight different complaints filed in federal courts across the country Thursday, the FTC accused 29 people with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts, and of violating the FTC Act's prohibition against engaging in unfair or deceptive trade practices.

The agency has accused the defendants of participating in a spam texting scheme that involved sending messages to random phone numbers, including to the 12% of mobile subscribers who don't have a plan that includes text messaging and who must therefore pay for every SMS they receive.

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"For consumers who find spam texts on their phones, delete them immediately. The offers are, in a word, garbage," said Charles A. Harwood, acting director of the FTC's Bureau of Consumer Protection, in a statement.

According to the FTC, the accused spammers promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Wal-Mart and Target. But after clicking on the links included in those messages, the agency said, consumers often ended up being redirected to websites that served only to extract their personal information or sign them up for credit card offers or paid services.

The cell phone scam mirrors the complex gift card scams already circulating via sites such as Facebook, which promise people who click on a link that they'll be rewarded with a gift card to a business such as Costco or Starbucks. First, however, people are often asked to provide their address -- supposedly so that the gift can be shipped to them -- and then told they must sign up for additional services, before ultimately being left with nothing except having parted with their personal information, sometimes including health details.

The alleged spammers operated businesses named AdvertMarketing, Appidemic, Rentbro, Seaside Building Marketing, Superior Affiliate Management and Verma Holdings. In addition, the FTC accused 10 employees of SubscriberBASE Holdings with operating websites to which SMS-spammed consumers were directed.

The FTC also filed another lawsuit Thursday -- including a contempt action -- against Phil Flora, who the agency accused of being "a serial text message spammer," noting that he was "barred in 2011 from sending spam text messages." Flora settled an FTC complaint in 2011 and was ordered by a judge to return $32,000 in profits after the FTC accused him in court documents of having sent a "mind-boggling" number of spam SMS messages at all hours of the day or night promoting mortgage modification services, and running a website ("loanmod-gov.net") that made it look as if he was affiliated with the U.S. government.

The FTC's enforcement actions highlight the ongoing rise in SMS spam. According to a report released last month by GMSA and messaging security provider Cloudmark, 50,0000 unique SMS spam campaigns -- and 350,000 variants -- were seen in December 2012 alone. The report said the quantity of SMS spam shipped over cell phone networks has been increasing by 300% annually.

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