Playstation 2 Spammers Settle with FTC

Defendants who sent spam promising a free Sony Playstation to lure consumers to pornographic Web sites, then redirected consumers’ Internet connections through a 900-number with a significant per minute charge, have agreed to settle Federal Trade Commission charges that their unfair and deceptive practices violated federal laws. The settlement shuts down the defendants’ alleged scam and permanently bars the defendants from sending any e-mail that misrepresents the identity of the sender or the subject of the e-mail.

In a complaint filed in U.S. district court, the FTC charged that the defendants sent e-mail claiming that consumers had won a Sony Playstation 2 or other valuable prize. Consumers who received the spam were told to click a hyperlink to collect their prize. The e-mails often had subject headings that said “Yahoo Sweepstakes Winner” and “You have just won a gift from Yahoo.” Once a consumer clicked on the hyperlink, the FTC alleges, they were taken to a Yahoo! look-alike Web site, featuring the “Yahoo!” logo, graphics, and the words “Copyright © 2001 Yahoo, Inc. All rights reserved.” The FTC’s complaint states that consumers were instructed to press “yes” to download software needed to complete a form to claim their prize, and were told that the connection would be toll-free. Once the consumer clicked “yes” and completed the download, his or her computer would be disconnected from its Internet connection and reconnected through a 900-number with a per minute charge of up to $3.99.

The FTC alleges that consumers were never told that downloading and executing the software

would result in significant charges, and that the promise of a Playstation 2 was false and deceptive. The settlement bars Christopher Baith, Cosme Monarrez, Jr., and Sorabh Verma from misrepresenting any fact and from sending spam that misrepresents the identity of the sender or the subject of the e-mail. The court also ordered Baith to pay $10,000, of which he will pay $2,500. The settlement states that Baith will be required to pay the remaining sum if it is determined that he misrepresented his financial situation.

In a separate action, BTV Industries, the company that created the modem dialer software that Baith, Monarrez, and Verma allegedly used in their scheme, also will settle FTC charges.

The FTC’s complaint against BTV Industries, Rik Covell, and Adam Lewis alleges that the defendants violated the FTC’s 900-Number Rule by failing to clearly disclose to consumers using their software that they would be connected to the Internet through a 900-number and would incur charges of up to $3.99 per minute. The settlement permanently bars the defendants from failing to disclose the cost of accessing any 900-number pay-per-call service, as well as from misrepresenting that consumers have won a prize, that consumers will be connected to any Web site toll-free, and that any of BTV’s products or services are associated with a third party. BTV Industries has given up $25,000 in alleged ill-gotten gains.

Both stipulated final orders contain standard recordkeeping provisions to assist the FTC in monitoring the defendants’ compliance.

The Commission vote to authorize staff to file the complaints and stipulated final orders was 5-0. The complaints and stipulated final orders for permanent injunction were filed in the U.S. District Court for the District of Nevada.

Note: Stipulated final judgments and orders are for settlement purposes only and do not constitute an admission by the defendant of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

Copies of the complaints and orders are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

FTC File No. 022 3291 (Baith, Monarrez, Verma)
FTC File No. X020029 (BTV Industries)