A group of defendants will pay approximately $10 million to the Federal Trade Commission to settle charges that they operated a massive scam that sent unwanted text messages to millions of consumers, many of whom later received illegal robocalls, phony "free" merchandise offers and unauthorized charges crammed on their mobile phone bills.

The settlement marks the completion of a major effort by the FTC to crack down on the senders of unwanted text messages offering consumers free gift cards to retailers such as Best Buy, Walmart and Target.

The messages contained links to websites that led consumers through a process that the FTC alleges was designed to get consumers’ personal information for sale to marketers, their mobile phone numbers to cram unwanted charges on their bill, and to drive them to paid subscriptions for which the scammers received affiliate referral fees.

The settlement resolves the FTC’s allegations against three groups of defendants: 

The first set of defendants must pay the FTC $7.8 million. The FTC alleged that this group was responsible for millions of illegal text messages, made deceptive claims about supposedly free merchandise, was responsible for unauthorized charges on mobile phone bills and assisted and facilitated the sending of illegal robocalls.

The defendants in this settlement are Acquinity Interactive, LLC; 7657030 Canada Inc., Garry Jonas, Gregory Van Horn, Revenue Path E-Consulting Pvt, Ltd.; Revenuepath Ltd.; and Sarita Somani.

Under the terms of the settlement, these defendants will be banned from sending consumers unwanted text messages, as well as from placing charges of any kind onto a consumer’s telephone bill, whether landline or mobile.

The settlement also bans the defendants from misrepresenting whether a product is free through a text message or webpage, and also requires the defendants to ensure that any affiliates working for them abide by the same provisions.

The settlement also requires the defendants to obtain consumers’ express informed consent before billing them and bans them from participating in illegal telemarketing.

"The operators of this scam bombarded consumers for months with deceptive text messages offering ‘free’ items, but the costs to consumers were very real – including the misuse of their personal information to cram unwanted charges on  their phone bills," said Jessica Rich, director of the FTC’s Bureau of Consumer Protection.

The second set of defendants will pay the FTC $1.4 million. The FTC alleged that this set of defendants was responsible for cramming unauthorized charges on consumers’ mobile phone bills.

The defendants in this group are Burton Katz, individually and also doing business as Polling Associates Inc. and Boomerang International LLC, and Jonathan Smyth, individually and also doing business as Polling Associates Inc.

Under the terms of the settlement, the defendants will be banned from placing charges of any kind on consumers’ telephone bills, as well as being banned from making any misrepresentations to consumers about a product or service, including the cost or a consumer’s obligation to pay. 

The defendants also must obtain consumers’ express informed consent before billing them for any good or service.

In the third settlement, an $8 million judgment is being suspended because of the defendants’ inability to pay, after they turn over available assets. The FTC alleged that this set of defendants was responsible for making millions of illegal robocalls.

Under the settlement, the defendants are required to pay the FTC $100,000, as well as the surrender value of a life insurance policy and proceeds from the sale of: a 2013 Cadillac Escalade, two motorcycles, and a real estate holding in Southern California.

The settlement also bans the defendants from illegally telemarketing consumers through robocalling. The defendants in this settlement are Firebrand Group S.L. LLC, Worldwide Commerce Associates LLC and Matthew Beucler.

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