This post was written by Kevin Xu and John Hines.
On February 22, 2011, the Federal Trade Commission (“FTC”) filed a complaint against Phillip A. Flora (“Flora”) for an operation that allegedly blasted consumers with millions of illegal spam text messages, including many messages that deceptively advertised a mortgage modification website called “Loanmod-gov.net.” The FTC is asking the court to shut down Flora’s operation and freeze his assets.
According to the FTC complaint, beginning on or about August 22, 2009, Flora transmitted or arranged for the transmission of at least 5 million spam text messages to random consumers. The text messages promoted products and services, including, but not limited to, loan modification programs and debt relief services. The text messages offered to help consumers obtain mortgage loan modifications and many of the messages state: “Homeowners, we can lower your mortgage payment by doing a Loan Modification. Late on payments OK. No equity OK. May we please give you a call? Loanmod-gov.net.” Consumers who visited this web address arrived at a website that touted itself as the “Official Home Loan Modification and Audit Assistance Information” beneath a picture of the U.S. flag. This website, although it included the term “gov” in its address, was not operated by or affiliated with any governmental entity. Additionally, Flora allegedly collected information from consumers who responded to text messages – even those asking him to stop sending messages – and sold their contact information to marketers claiming they were “debt settlement leads.”
The FTC charges that Flora violated the Section 5(a) of the FTC Act, which prohibits unfair or deceptive acts or practices in or affecting commerce, by sending unsolicited commercial text messages to consumers, and by misrepresenting that he was affiliated with a government agency. In addition, the FTC charges that Flora violated the CAN-SPAM Act by sending consumers spam text messages that failed to include a way for consumers to “opt-out” of future messages and failed to include the physical mailing address of the sender, as required by the CAN-SPAM Act.
The outcome of this case, which we note is being brought by the FTC and not the FCC, may have a significant impact on consumer data privacy rights in the mobile communications sector, and may serve as a watershed case for consumers’ potential recourses in future privacy violation situations arising from mobile communications.