5 legal issues that could impede mobile marketing's progress
While mobile marketers? privacy practices are in the hot seat recently, they should should be careful to not overlook a handful of other legal issues that could affect how they conduct business.
This year alone, Microsoft sued Barnes & Noble over patent infringement, Google is being sued over its mobile data collection practices, there have been congressional hearings addressing mobile privacy and state attorneys general are investigating SMS fraud. On top of that are the revolving door of lawsuits - proxy and direct - involving Apple, Amazon, Google, Microsoft, Nokia and numerous patent trolls.
?There are a number of very serious consumer protection issues that marketers need to be concerned about,? said Linda Goldstein, partner and chair at Manatt Phelps & Phillips, New York.
Indeed, legal challenges are common when a new medium such as mobile takes off.
?It?s rarely easy to figure out how old laws will apply to new technologies, so when marketers experiment, lines inevitably get crossed, legal challenges follow, and the legal landscape changes,? said Gonzalo Mon, attorney with Kelley Drye + Warren, Washington.
Here are some of the most pressing legal issues facing mobile marketers.
Disclosure is something that all mobile marketers should be monitoring.
It is common for companies to get in trouble for failing to clearly disclose offer terms and have to pay to settle investigations.
With the growth of applications, scrutiny is turning to how mobile marketers disclose the terms of in-app purchases.
?The limited space on mobile screens presents challenges for making disclosures, but marketers need to find creative ways to ensure consumers see material terms before they pay any money,? Mr. Mon said.
Privacy hot seat
Privacy is a related issue, with mobile companies increasingly under fire for not adequately disclosing their mobile data collection practices to consumers.
There has been a big focus on mobile privacy issues in the past few months. The Federal Trade Commission issued a privacy report that included recommendations for mobile marketers in December.
This was followed by reports about the scope of mobile companies? data collection practices, which have led to several lawsuits and Congressional hearings.
?It?s a safe bet that the legal landscape will change, but, it?s too early to predict exactly how,? Mr. Mon said.
?It?s clear, though, that privacy can?t be an afterthought,? he said. ?Marketers should consult with their legal counsel in the early stages of any mobile campaign.?
This means marketers need to get all their ducks in a row when it comes to privacy.
They should also pay attention to how privacy proposals will affect them.
?Marketers need to make sure their location data collection in permission-based,? said Andy Lustigman, principal attorney at The Lustigman Firm P.C, New York. "There is not a hard-and-fast rule on privacy issues.?
Also, marketers should be thinking about self-regulatory solutions.
?I think mobile marketers need to be mobilizing and beginning to lobby,? Manatt Phelps' Ms. Goldstein said. ?I think they also need to be focused on self-regulatory programs that would work in the mobile space.?
Did you get permission?
Consent or permission is another area of concern and one that will likely grow in importance as mobile payments take off and companies deal with such issues as how to eisure that the person making a mobile transaction is, in fact, authorized to do so.
?With part of the future of mobile being its ability to serve as a payment device, you are going to increasingly run into issues of what constitutes adequate consent,? Ms. Goldstein said.
After the courts determined that text message campaigns are subject to the Telephone Consumer Protection Act, requiring companies to get consent before sending text messages, marketers have been struggling with what constitutes sufficient consent to be able to contact a consumer via mobile.
?How do you get to consumers without running afoul of not having sufficient opt-in is one of the biggest areas of concerns for marketers,? Mr. Lustigman said.
Many companies have gotten into trouble for failing to get consent before sending text messages, with settlements reaching into the millions.
The FTC recently brought its first case against an alleged text scammer, claiming that the act of sending unsolicited text messages without consent is a violation of both the Telephone Consumer Protection Act as well an unfair and deceptive trade practice.
A growing concern is cramming, or unauthorized charges to a consumer?s phone bill.
The FTC recently ran a workshop on cramming that focused on the issues that apply to the mobile space. This is also on the radar for state attorneys general.
AT&T and Sprint recently suspended Jawa's premium SMS codes to investigate allegations from Verizon Wireless and the Texas attorney general of text message fraud.
The challenge for marketers here is a lack of standards and how to communicate the necessary information in a text message.
?Charges on phone bills for third-party services run the risk of a regulator taking the position that consumers did not appreciate that they can incur charges on their phone notwithstanding the fact that they affirmatively agreed to the service,? Mr. Lustigman said.
The patent infringement issue, while a key one, is something more pressing for hardware and software companies more than marketers.
?It?s obviously a big issue and the outcome will have a significant impact on which companies ultimately flourish in the space,? Ms. Goldstein said.