FreeLotto.com, a company offering consumers a chance to play games online and win prizes and cash, has settled charges with the State of New York, which accused it of using deceptive and misleading ads.

Under the agreement, PlasmaNet, the parent company, will pay $1.5 million in penalties, costs, and fees to New York State and will make refunds available to eligible consumers over the next six months. PlasmaNet must also significantly reform its advertising practices.

PlasmaNet's advertising campaign was a classic bait-and-switch scheme, said New York Attorney General Cuomo. They played with peoples emotions and used half truths to trick consumers. The integrity of the marketplace in New York State is undermined when businesses engage in this type of deception, whether it takes place in a storefront or on the Internet. Todays agreement puts an end to these practices and provides restitution to consumers who were taken in by this scheme.

On FreeLotto.com, consumers can play online lottery-style sweepstakes games with the chance to win real prizes valuing between $1 and $10,000,000. Since 1999, over 57 million consumers worldwide have registered with the website.

Consumers can play on FreeLotto.com free of charge as long as they agree to receive emails from PlasmaNet and visit the site every day. Consumers do not have to visit daily if they purchase the FreeLotto Automatic Subscription Ticket (F.A.S.T.) service, for $14.99 per month. With the F.A.S.T. service, consumers can program PlasmaNet to automatically play the sweepstakes games for them.

The investigation concluded that in March 2006, PlasmaNet began sending deceptive and misleading emails to FreeLotto.com players notifying them of pending prizes between $300 and $10,000,000 and directing them to CLICK TO CLAIM their prize winnings. The players had not actually won these prizes. In reality, they were unknowingly purchasing FreeLotto.coms F.A.S.T. service.

Cuomo also found that PlasmaNet used deceptive and misleading banner advertisements to generate FreeLotto.com registrations. The majority of PlasmaNets banner advertisements for the FreeLotto.com website stated that the viewing consumer had, in fact, already won a prize. PlasmaNet did not, however, disclose that the consumer had to register with FreeLotto.com and agree to receive advertising from PlasmaNet in order to collect it.

Under the agreement with the Attorney General, PlasmaNet will provide a refund of up to three months worth of subscription costs to consumers who inadvertently paid for the F.A.S.T. service between March 1, 2006 and October 31, 2007. Consumers who believe they are eligible should contact the New York Attorney Generals Internet Bureau for more information about the refund process. The bureau can be reached at 1-212-416-8433.