In the first large-scale filing of its kind, the FTC is suing an alleged spammer accused of sending millions of SMS messages to non-subscribed users.
The lawsuit, filed late last month in U.S. District Court for the Central District of California, alleges that the spammer, Phillip Flora, sent millions of unsolicited text messages to consumers advertising loan modification and debt-relief programs. In one 40-day period starting in August of 2009, Flora allegedly sent 5.5 million such messages. In addition, Flora sent millions of unsolicited email messages to consumers promoting his deceptive “SMS marketing services.”
Flora then sold the mobile numbers of respondents to third-parties as “loan modification leads,” violating even more government regulations. Authorities say the ads were deceptive because they directed users to a site with “gov” in the domain name — loanmod-gov.net — even though the site had no connection to the government. The FTC also alleges that the ads are unfair to consumers because many recipients were charged for the SMS ads by their wireless carriers.
The suit is significant in the mobile world because it marks the first time the FTC has gotten involved in SMS spam, even though the organization has received numerous complaints in the past. Consumers themselves have recently begun suing alleged SMS spammers for violating the Telephone Consumer Protection Act (TCPA), which prohibits marketers from using “automatic telephone dialing systems to make calls to cell phones unless the owners have consented.”
The FTC is seeking an order directing Flora to stop sending the ads and monetary damages, including restitution to the recipients who were charged for the text messages. FTC attorney Robert G. Schoshinski says industry estimates show that around 12% of all wireless users are charged up to 20 cents per message for incoming texts. “The damages could potentially be very large,” he says.
