PhotoThey didn't give away any "free $1,000 gift cards" but 12 defendants will soon be coughing up $2.5 million to settle Federal Trade Commission charges that they enticed consumers with bogus gift card offers.

The FTC alleged that the South Carolina- and California-based corporate defendants hired affiliate marketers to send millions of spam text messages to consumers around the country. With links to the defendants’ sites, the messages included text such as, “Dear Walmart shopper, your purchase last month won a $1000 Walmart Gift Card, go to [website address] within 24 hours to claim.”

“This case halts a nationwide operation that took in millions of dollars by promising consumers free gift cards that it never delivered,” said Jessica Rich, Director of the Bureau of Consumer Protection. “We’re pleased to stop these unwanted messages and protect consumers’ personal information.”

When consumers clicked on the links in the spam text messages, they were taken to landing pages operated by one group of defendants that asked them to “register” for the free prizes they had been offered. The registration process, the complaint alleges, was actually a method by which the defendants collected information about the consumers that was then sold to third parties.

Once consumers provided this information, they were taken to sites owned by another group of defendants. On these sites, consumers were told that to win the prize they had been offered, they were required to complete a number of “offers,” many of which involved either paid subscriptions to services, or applying for credit. The complaint alleges that the defendants were paid by the companies that advertised these offers.

Under the FTC settlements all the defendants will be banned from being involved in the distribution of unwanted spam text messages, as well as from misrepresenting whether a good or service is “free,” or whether a consumer has won a contest or prize. They are also banned from misleading consumers about why they are collecting consumers’ personal information, whether the information will be sold, or the extent to which they will protect consumers’ privacy. 

Share your Comments