For Release: April 24,
2002 "You've Just Won a
Playstation 2!" - or Maybe Not, Says FTC in Complaint Filed
Against Internet Spammers
Spam Scam Targeted
Kids and Their Parents
"Spam" e-mail messages claiming
that consumers had won a free Sony PlayStation 2 or other prize
through a promotion purportedly sponsored by Yahoo, Inc.,
instead routed consumers to an adult Internet site via a
900-number modem connection that charged them up to $3.99 a
minute, according to a complaint filed under seal by the Federal
Trade Commission on March 27 and announced today. The complaint
was brought as part of the recent International Netforce law
enforcement effort, in which the FTC joined eight state law
enforcers in the United States and four Canadian agencies in
investigating and bringing 63 actions against a wide range of
Internet scams for allegedly sending deceptive unsolicited
e-mail and engaging in Web fraud.
According to the FTC, when
consumers responded to a spam e-mail message telling them that
they had won the game system, they were directed to a Web page
that imitated the authentic Yahoo page. The imitation Yahoo Web
site instructed consumers to download a program that would
supposedly allow them to connect "toll-free" to a Web site where
they could enter their name and address to claim their
PlayStation. Consumers who followed the instructions were
connected to a pornographic Web site through a 900-number, where
they incurred significant per- minute charges.
"This case involves
'bait-and-switch' of the worst kind," said J. Howard Beales,
III, Director of the FTC's Bureau of Consumer Protection. "The
spammers promised a product that's particularly attractive to
kids. They delivered a product that's offensive to many adults,
and totally inappropriate for kids. Consumers were told it was
free, but they were charged minute-by-minute. The FTC has put a
stop to it."
The complaint announced today
named as defendants Rik Covell, Adam Lewis, BTV Industries,
National Communications Team, Inc., LO/AD Communications Corp.,
and Nicholas Loader. At the request of the FTC, a U.S. District
Court has halted the scheme and frozen the corporations' assets
pending a preliminary injunction hearing. The agency alleges
that the scam has caused millions of dollars in consumer injury,
and has asked the court to preserve the assets for consumer
redress.
According to the Commission, the
goal of the entire scheme was to lure consumers to the
defendants' adult Web site and to collect fees through the use
of a 900-number service. While the spam message deceptively
stated that the consumer was the winner of a Yahoo Sweepstakes
contest and was entitled to a free PlayStation, consumers who
followed the directions and tried to collect their "free" prize
found there was no claim form on the linked site and no
PlayStation either.
The
Commission charged the defendants with violating the FTC Act and
the Pay-Per-Call Rule, which implements the requirements of the
Telephone Disclosure and Dispute Resolution Act of 1992. The
FTC's complaint alleged that the defendants' practices were
deceptive and misled consumers, through their claims: 1) that
consumers had won a prize; 2) that Yahoo sent the e-mail; and 3)
that the connection to the Web site was toll-free. Additionally,
the FTC said the defendants violated the Pay-Per-Call Rule by
not disclosing the cost of connecting to the Web site and by not
providing an audio introductory disclosure message when
consumers connected to the Internet through the 900-number.
In its complaint, the FTC is
seeking a permanent injunction and other equitable relief,
including consumer redress. The Commission vote authorizing
staff to file the complaint was 4-0, with Commissioner Sheila
Anthony not participating. The complaint was filed under seal in
U.S. District Court for the District of Nevada on March 27,
2002. The seal was lifted on April 22, 2002. |