FTC Lawsuit Targets Text Spamming Operation

On February 22, 2011, the Federal Trade Commission filed a lawsuit against Phillip A. Flora (AKA “Phil P.”), based on millions of unsolicited text messages allegedly sent to consumers marketing home loan modification and debt relief services.

In Federal Trade Commission v. Phillip A. Flora, which was filed in the Central District of California, Flora sent millions of illegal spam text messages that deceptively advertised a mortgage modification website called “Loanmod-gov.net.” The FTC alleged that the web address was deceptive in that the domain mimicked official government sites, and that the website itself claimed to provide “Official Home Loan Modification and Audit Assistance Information,” and displayed a photo of an American flag.

According to the FTC complaint, in one 40-day period, the defendant sent more than 5.5 million spam text messages, at a “mind boggling” rate of about 85 per minute, every minute of every day, and collected information from consumers who responded and sold them to third party marketing companies as debt settlement leads. The so-called leads even included information of consumers whose only response was a request to stop sending messages.

The suit is based on the deceptive nature of the advertising itself, and violations of the CAN-SPAM Act, which governs the sending of commercial email. The FTC and most courts consider text messaging to fall under both the CAN-SPAM Act and the Telephone Consumer Protection Act.

For more information on how those laws apply to SMS advertising, please click here.

Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.
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