FTC Beats Down SubscriberBase and All Square MarketingWritten by Michael Levanduski
February 23, 2014 # 11:40 pm # Industry News, Legal Challenges, Specials # 3 Comments
The FTC has approved a settlement against a total of twelve defendants who were running digital marketing campaigns which promised “free $1,000 gift cards” to people viewing their ads. They ran many websites running ads that attempted to get people to click in order to claim a gift card, which they supposedly had already won.
The settlement was split into two portions, with the first having to pay $1,320,00. Included in this settlement were the following individuals and companies:
- All Square Marketing, LLC
- Threadpoint, LLC
- PC Global Investments, LLC
- Slash 20, LLC
- Matthew Cook
- Robert Nicolosi
- Christopher McVeigh
- Michael Mazzella
The second set of defendants had to pay out $1,180,000. These defendants were:
- SubscriberBase Holdings, Inc
- SubscriberBase, Inc
- Jeffery French
- Jason Liester
All of the defendants were also banned from taking part in any type of distribution of unwanted spam text messages. They are also severely limited in the type of marketing they can do, including limitations on how they can represent whether a service or product is ‘free’ and telling someone that they have one any sort of contest or prize. In addition, the settlement touches on other marketing practices that are frowned upon by everyone, but needed to be specifically listed to these marketers.
Specifically, they are banned from misleading consumers concerning the reasons why their personal information is being collected. They have to make it clear if the personal information may be sold to third parties, and provide information about the extent to which they will be keeping the consumers’ privacy safe.
This is the end of a long case against these companies. The companies had hired affiliate marketers to drive traffic to their websites. The traffic was driven using many different methods, including spam text messages, advertisements and more. The text messages would make claims such as, “Dear Walmart shopper, your purchase last month won a $1000 Walmart Gift Card, go to *website* within 24 hours to claim.”
Once people clicked on the links, they would be taken to pages run by the defendants, which asked them to register for the free prizes. This information was simply gathered up by the first group of defendants. They would then sell the consumer’s information to third parties.
Once the information was collected on the initial landing page, they would send the consumer on to the second group of defendants’ pages where enticed to complete offers in order to get the prize they were initially told they had already won. These offers often required applying for credit or signing up for paid subscriptions or services.
This was a very widespread scam that was run for years, and the settlement will hopefully put an end to this type of deceptive marketing as other marketers will see just how serious it is.