FTC confirms nothing comes for free

Everyone has seen those annoying ads and e-mails that say, "Click here to receive a free Xbox 360!" or "Congratulations, you've been chosen to win a Dell laptop! Click here to claim your prize." Most of us are wise enough to realize there's a catch, but many naïve Internet users click on them. The company putting out those ads has just made a settlement on charges from the Federal Trade Commission, because as we probably all could have guessed, those freebies aren't free.

As it turns out, when users clicked on the ads, they were taken to promotional Web pages where they had to go through a maze of "optional" offers from third parties. "If they clear this hurdle, they discover that they must 'participate in' a series of third-party promotions that require them to do things such as purchase products, subscribe to satellite television service, or apply for multiple credit cards," the FTC press release says.

The FTC recently concluded that the online advertiser, Member Source Media, was using spam e-mails (which violates the hilariously-titled CAN-SPAM Act) with misleading subject lines and failing to disclose that consumers had to spend money to get the "free" swag. Today a settlement was filed by the Department of Justice on behalf of the FTC, which requires Member Source Media to disclose costs and obligations to qualify for the products. It also prohibits the company from sending anymore spam e-mails and requires them to fork over $200,000 in civil penalties.

Yesterday I wrote a blog about the deceitfulness of infomercials, and how if something looks too good to be true, it probably is. Here's a great example, folks. If you've entered a legitimate contest and won, that's one thing. But if you are sent an unsolicited e-mail or see an ad declaring you've won something, don't fall for it. And certainly don't apply for six new credit cards just to get an iPod nano. Be a smart consumer.