Rishab Verma, Verma Holdings, LLC permanently banned from sending unsolicited messages.
By The American Bazaar Staff
WASHINGTON, DC: A text message spammer and his company in the US have agreed to settle Federal Trade Commission charges that they were responsible for sending millions of unwanted messages to consumers across the country, which contained false promises of “free” $1,000 gift cards for major retailers like Walmart, Target and Best Buy.
Under the terms of the settlement with the Federal Trade Commission (FTC), Rishab Verma and his company, Verma Holdings, LLC, will be permanently banned from sending unwanted or unsolicited commercial text messages or assisting others in doing so. In addition, the two will be prohibited from misrepresenting to consumers that a product is “free,” that they have won a prize or been selected for a gift, or that consumers’ personal information is needed to send free merchandise, said a release issued by the FTC.
Verma and his company were among the defendants in the Commission’s 2013 sweep against text message spammers and affiliate marketers who used false promises of gift cards to draw consumers to websites that collected sensitive personal information. The sites also required consumers to provide credit card information to sign up for trial offers.
The settlement contains a monetary judgment of $2,863,000, which is suspended due to the defendants’ inability to pay after Verma and the company pay $26,100.
The Commission’s vote approving the proposed stipulated final judgment was 5-0, and is subject to court approval. The FTC filed the proposed stipulated final judgment in the U.S. District Court for the Southern District of Texas, Houston Division.
The case emanates from eight different complaints filed in courts around the United States and the FTC had charged 29 defendants, including Verma, with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts. 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.
According to the FTC complaints, the defendants also sent text messages to random phone numbers, including to consumers who do not have a text message subscription plan. As many as 12 percent of mobile phone users fall into this category.
When consumers followed the links included in the unwanted messages, they were directed to sites that collected a substantial amount of personal information, including in some instances health information, before being allowed to continue toward receiving the supposed gift cards. In many cases, the information was requested under the guise of being shipping information for the supposed gift cards. The Commission alleged the information collected was then sold to third parties for marketing purposes, meaning consumers were deceived as to the real use of the information.
Once consumers entered their personal information, they were directed to another site and told they would have to participate in a number of “offers” to be eligible for their gift card. In some cases, consumers were obligated to sign up for as many as 13 of the offers. These offers frequently included recurring subscriptions for which consumers were required to provide credit card information. In other cases, they required consumers to submit applications for credit that would be reflected in their credit reports and possibly affect their credit score. If a consumer completed all of the “offers,” they were then notified that to get the promised gift card, they had to find three others who also would complete the offers.
The FTC alleged that the operators of these sites violated the FTC Act by failing to tell consumers about all the conditions attached to the “free” gift, including the possibility that consumers would actually be required to spend money to receive the gift.
According to the FTC, the defendants who sent the text messages were paid by the operators of the “free” gift websites based on how many consumers eventually entered their information. The operators of the free gift websites were in turn paid by those businesses who gained customers or subscribers through the “offer” process.