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Thursday, March 14, 2013

FTC busts 'free' gift card scheme

The Federal Trade Commission charged 29 different organizations with allegedly spamming mobile phone users with hundreds of millions of text messages that attempted to steer them to websites that falsely promised "free" gift cards in exchange for the disclosure of personal information, including credit card and health information. The FTC filed eight different complaints in courts around the United States that target the marketers of the text messages as well as the operators of the websites.

The FTC said the marketers collectively sent over 180 million unsolicited text messages to consumers. The messages reportedly promised consumers free gifts or prizes, including gift cards worth $1,000 that could be used at national retailers such as Best Buy Co. Inc., Wal-Mart Stores Inc. and Target Brands Inc.

"Consumers who clicked on the links in the messages found themselves caught in a confusing and elaborate process that required them to provide sensitive personal information, apply for credit or pay to subscribe to services to get the supposedly free cards," the FTC noted. The FTC did not specify what the subscriptions were for.

Elaborate schemes

The FTC said that once consumers entered personal information on websites, they were directed to other sites where they were sometimes obligated to sign up for as many as 13 different offers that included recurring subscriptions for which consumers needed to provide credit card information.

In other instances, consumers had to submit applications for credit that would be reflected in credit reports and possibly affect credit scores, the FTC alleged. As a final hurdle, consumers had to find three other individuals to complete the offers before the initial fraud victims could receive their promised – but actually imaginary – gift cards, according to the commission.

The instigators of the schemes were apparently the subscription providers that paid the website operators for the number of consumers who signed up for subscriptions; the website operators in turn paid the text message marketers for how many consumers steered to the websites eventually entered personal information. The commission said the information collected by the subscription operators was then sold to third parties for marketing purposes – the true purpose of the schemes. end of article

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