NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo has announced nearly $2.5 million in settlements Monday.
PlasmaNet, Inc., which owns the FreeLotto.com Web site, will pay $1.5 million in penalties, costs and fees to the state and make refunds available to eligible consumers as a result of its deceptive and misleading advertisements. Additionally, the company will make significant reforms to its advertising practices.
"PlasmaNet's advertising campaign was a classic bait-and-switch scheme," Cuomo said.
"They played with people's emotions and used half truths to trick consumers. The integrity of the marketplace in New York State is undermined when businesses engage in this type of deception, whether it takes place in a storefront or on the Internet.
"Today's agreement puts an end to these practices and provides restitution to consumers who were taken in by this scheme."
FreeLotto.com allows consumers to play lottery-style sweepstakes games online, offering the chance to win prizes of as much as $10,000. The site is free as long as consumers agree to receive emails from PlasmaNet and visit the site daily.
Consumers that purchase the "FreeLotto Automatic Subscription Ticket" service for $14.999 per month can automatically play the sweepstakes game and do not need to visit the site daily.
Beginning in March 2006, Cuomo's investigation revealed, PlasmaNet began sending deceptive and misleading emails to players of "pending" prizes of between $300-$10,000. The emails directed the consumer to "CLICK TO CLAIM" prize winnings that had not actually been won. Instead, they were unwittingly purchasing the $14.99 a month F.A.S.T. service, Cuomo says.
Additionally, banner advertisements on the FreeLotto.com Web site informed consumers that they had already won a prize but did not disclose that consumers had to register with the site and agree to receive PlasmaNet's advertising to collect it, Cuomo says.
PlasmaNet, under the agreement, will provide up to three months of subscription costs as a refund to consumers who inadvertently paid for F.A.S.T. service between March 1, 2006-Oct. 31, 2007.
In another settlement announced by Cuomo, the Clifton Park, N.Y.-based County Waste and Scott Earl, its president, will pay nearly $1 million to the town of Colonie, the State and a whistleblower to resolve allegations that the amount of waste disposed of in the town by the company was understated and that it neglected to meet state environmental permitting requirements.
The settlement is the first disposition of a New York State False Claims Act case to not related to Medicaid fraud, which provides protections to whistelblowers who uncover fraud against government agencies.
An investigation by Cuomo's office found that County Waste had underreported the amount of waste delivered to the town of Colonie's landfill in submitted vouchers. This action undercut the amount of money owed to the town by the company, Cuomo claimed.
The company, however, said it operates legally.
"The settlement reached today is the best decision for County Waste and Recycling's more than 400 employees and 180,000 residential, commercial and municipal customers who expect and appreciate the dependable, quality service we provide," the company said.
County Waste and Scott Earl, under terms of the settlement, will pay a total of $986,186, with $736,186 paid to resolve the allegations of submission of false weight slips. The remaining $250,000 will pay fines and penalties to the State. The whistleblower in the case will receive $163,651 from the total amount paid.