Federal Trade Commission v. Flora, No. 11–CV–00299 (C.D. Cal. Aug. 16, 2011) Under a settlement between a defendant and the Federal Trade Commission ("FTC") the U.S. District Court for the Central District of California issued a stipulated order for a permanent injunction and disgorgement against an alleged spammer for violating the FTC Act, 15 U.S.C. § 45(a), and the Controlling the Assault of Non-Solicited Pornography and Marketing ("CAN-SPAM") Act, 15 U.S.C. § 7701.
FTC Alleges Five Million Spam MessagesIn February 2011, the FTC filed a complaint in federal district court in California alleging that Phil Flora sent over five million unsolicited text messages ("spam") to consumers' cell phones, pitching mortgage modification and debt relief services. According to the FTC, consumers often had to pay their cell phone carriers for the unwanted text messages, if their wireless service plans required them to pay a fee for each text message received, or were billed for text messages exceeding a monthly limit. The FTC also claimed the recipients did not agree to receive the texts, received them in late-night or early morning, or while at work or school, and experienced annoyance, frustration and harassment from the large amount of spam. The FTC also alleged many of the numbers were on the national "Do Not Call" list. The messages directed consumers to reply, or to visit a website, where, the FTC claimed, Flora collected mortgage information from them and allegedly sold it and the consumers' cell phone numbers to third parties as "debt settlement leads." The website was misrepresented as being affiliated with the government, using the header "Official Home Loan Modification and Audit Assistance Information," and a domain name that included ".gov" ("loanmod-gov.net"). The FTC claimed that the "mind-boggling" amount of spam and other these activities violatedSection 5 of the FTC Act. Flora also allegedly sent e-mail spam to consumers' computers that lacked an opt-out feature and the sender's physical address, in violation of Section 7704 of the CAN-SPAM Act.
Settlement Bans SpamWithout admitting any violation of the law or any of the facts alleged by the FTC, Flora and the FTC agreed to a final order and permanent injunction to resolve the claims by the FTC against Flora. Flora agreed to the entry of a permanent injunction and a judgment of almost $59,000, along with compliance and other obligations. The court noted that the monetary relief was equitable and remedial, and not a penalty or forfeiture. The court permanently enjoined Flora from sending, or helping others to send, unauthorized or unsolicited commercial text messages, or sending any commercial e-mails that do not have a clear and conspicuous opt-out feature and the sender's physical postal address. Flora was also permanently enjoined from directly or indirectly violating the CAN-SPAM Act, and from in any way disclosing the name, address, telephone number, credit card number, bank account number, e-mail address, or other identifying information obtained from anyone who provided it in response to Flora's e-mail or text messages, or through the website. Moreover, the settlement provides that Flora may not make any false or misleading claims about any good or service, or misrepresent an affiliation with a government agency, must destroy all such information in his possession, and must submit to compliance monitoring by the FTC. DisclaimerThis document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.
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