Jesta Digital, a mobile company which according to their website delivers content, music, games and apps to its customers recently settled a lawsuit brought on by the FTC for $1.2 million as well as issuing refunds to a large number of customers. What did Jesta do which warranted the lawsuit? According to the FTC complaint filed, In August 2011 Jesta began running deceptive banner advertisements on the free version of their hugely popular Angry Birds app for Android devices.
The advertisement, which looked like an official Android notice, placed a banner in the app which alerted users that a virus was detected, and offered a button to remove it. The problem is, however, that the app never scanned the phone, or found any type of virus to prompt this warning. As if this weren’t enough, those who clicked the banner ad were subscribed to a $9.99 monthly contract to download 20 ringtones and other items. This monthly payment was placed directly on the subscriber’s cell phone bill.
Out of 100,000 subscribers, only 372 actually made it to the point where they were able to download any type of anti-virus software. Ironically, even those who did get to download the mobile anti-virus program didn’t even need it because their device wasn’t infected with any virus or malware to begin with.
T-Mobile, a large cell phone provider, was receiving so many calls from subscribers about the charges that they threatened to cut off billing for Jesta, or fine them. The FTC quoted Jesta’s director of global marketing who said in an email, “If I got a bill for $9.99/mo and don’t even remember downloading a shitty ringtone then I’d be more inclined to make sure I got my money back. Not just that, but they have a stronger case to plead ignorance if they didn’t download anything. Maybe not directly correlated, but still a terrible user experience.”
With comments like that from executives within the company, it is not surprising that Jesta Digital wanted to settle this case as quickly as possible. Marc Greenwald, co-chair of Quinn Emanuel Urquhart & Sullivan who represented Jesta, said “Jesta is pleased to have resolved this issue. This one advertising campaign was shut down as soon as Jesta management learned about it. Jesta’s advertising campaigns are all compliant with or exceed standards set by the Mobile Marketing Association.”
In the settlement the company did not admit or deny wrongdoing. In addition to the fines and refunds, Jesta is barred from making deceptive statements about viruses and anti-virus software, the cost of goods or services, or the conditions of a purchase. They are also required to receive express, verifiable, authorization from a consumer prior to charging them any fees or placing any fees on their mobile phone bill. Of course, all mobile companies are barred from these types of deceptive advertising techniques anyway, but apparently the courts felt Jesta needed a little extra reminding.
Jesta Digital is a part of the Jesta Group, which is a global real estate and hospitality investment firm. They were purchased from Fox Mobile Group, which was owned by News Corp, in 2010. Jesta Digital has headquarters in Las Angeles, Berlin and New York City.
You can see the settlement details HERE, and FTC Complaint HERE.
