The Federal Trade Commission staff has issued a report based upon a public town hall meeting the commission hosted in May 2008 to explore consumer protection issues arising in the mobile commerce marketplace.

The report, "Beyond Voice: Mapping the Mobile Marketplace," says that cost disclosures of mobile services continue to generate consumer complaints. The FTC staff will continue to monitor cost disclosures, bring law enforcement actions as appropriate and work with the industry on improving its self-regulatory enforcement.

"It is clear that consumers continue to benefit from the ease and convenience of products and services offered in the highly dynamic mobile marketplace," the FTC report says. "While the mobile commerce industry has made considerable strides in adopting industry-driven best-practices in advertising and billing for mobile services, mobile commerce presents unique issues for certain segments of the U.S. population, including minors.

"Collaboration among industry associations, consumer groups and law enforcement -- both domestic and abroad -- will be necessary to help prevent unfair and deceptive business practices in the mobile marketplace," it says. "Consumer and business education also can play a significant role in empowering consumers as they navigate the ever-evolving mobile marketplace."

At the town hall meeting the FTC determined that it is necessary for the commission and its law enforcement partners to continue to monitor the impact on consumers of unwanted mobile text messages, malware and spyware, and take law enforcement action as needed (see story).

Wireless carriers currently block hundreds of millions of unsolicited text messages every month, according to the FTC.

The cost to the carriers is considerable, but the cost to consumers of receiving voluminous amounts of unwanted text messages would be even greater.

Spyware and malware have not yet emerged as a significant problem on mobile devices. However, that situation could change as consumers increasingly use mobile devices for a wide variety of applications, including Internet access.

The FTC staff encourages stakeholders to continue developing strategies that prevent or minimize the spread of spam, spyware and malware on consumers' mobile devices.

"I agree that the FTC does play a role in setting standards through regulations in the mobile space, at least as it pertains to the use of carrier-based marketing and commerce solutions, specifically, the use of SMS and MMS texting," said Marci Troutman, founder/CEO of Siteminis. "With regulation in this particular mobile space there will be a more defined set of rules that could possibly cut down on the lawsuits that are hitting the marketplace regarding opt out rulings, privacy policies, and how customers are affected with adding incremental charges to their phone bills.

"In my opinion, there are many companies that are on the edge of utilizing this technology to improve the ways customers interact with them," she said. "Without clear direction or regulation this business model could end up in a litigious mess.

"The mobile carriers, I don't believe should carry this weight alone, even though they almost have a monopoly on most of the transactions that are carried out through the mobiles, simply due to the ease of usage for the customer in the current Mobile Business Model."

May's town hall meeting addressed the mobile marketplace in the United States.

The speakers discussed the contours of the current mobile market place and factors affecting the adoption of new mobile applications.

Panelists provided their perspectives on mobile messaging.

Specifically, panelists described commercial uses of mobile messaging and consumer protection issues raised by premium-rate and unsolicited mobile messaging.

"I presented at the FTC hearing last year and I commend the FTC in continuing to work with industry on improving its self-regulatory enforcement," said Gary Schwartz, president/CEO of Impact Mobile.

"I believe that mobile is a strictly self-regulated industry," he said. "Services-based SMS is sent over short codes which are managed by private carrier networks -- this is not the wild-west of the world wide web where you sometimes need a sheriff."

Dorian Porter, CEO of Mozes and a panelist, mentioned consumer "hesitancy" and "distrust" as barriers to the growth of mobile commerce.

On the marketing side, he noted that it is still difficult to build compelling marketing campaigns.

Mr. Porter closed by recommending that industry "embrace long-term value propositions," that policy mak­ers recognize "how big" mobile commerce is and not limit its growth.

Panelists discussed the importance of being straight-forward with consumers in terms of cost.

Whether or not the representations and disclosures are easily viewable depends upon a number of factors, including their font size, location and pixel resolution.

Additionally, the representations and disclosures must make it easy for consumers to understand whether a purchase is required for a particular service and the cost of making the purchase.

"In the world of off-deck smartphones services, the FTC needs to continue to review privacy but again the handset application storefront managers have shown their commitment to self-regulatory enforcement," Mr. Schwartz said. "I think the operative phase here is "proactive enforcement mechanism" -- I think the mobile industry does a very good job. Everyone in the value-chain has a stake in making this medium work for the consumer."

There have been several lawsuits against companies in which consumers claim that information was misrepresented to them.

For example, New York state attorney general Andrew M. Cuomo recently announced a $2.63 million agreement with AT&T Mobility over a misleading sales promotion involving rebate offers.

The attorney general's agreement required AT&T to provide more than $2.63 million to consumers who received rebate cards in fulfillment of its rebate offers on mobile phones and other wireless equipment and services. AT&T also had to change future rebate ads as part of the settlement (see story).

Additionally, the Florida attorney general has been crusading against errant mobile firms.

Florida attorney general Bill McCollum concluded a $1 million settlement with Atrinsic, a California-based seller of mobile content and national advertising network.

The settlement, with Atrinsic's New Motion Inc. and Traffix Inc. companies, require them to disclose pricing and subscription terms in online marketing for mobile content. The mobile content marketers were prosecuted over allegations relating to improper billing of mobile content.

The settlement came almost a month after Mr. McCollum wrapped up a $1 million settlement with Mobile Messenger Americas Inc., a marketer of content for mobile phones and billing aggregator for mobile content promotions.

Per the Jan. 23 settlement with Florida attorney general's cyber fraud section of his economic crimes division, Mobile Messenger Americas will be required to disclose the price of mobile content or services and other material terms of purchase conspicuously and specifically disclosed on all online transaction screens (see story).

"The mobile marketplace continues to expand at a rapid pace," the report says. "In the months following the mobile town hall, the number of marketers entering the mobile space has increased, new devices have pro liferated and the number of new mobile applications has continued to swell .

"The emerging mobile marketplace raises a host of opportunities as well as a host of consumer protection challenges." It says. "The town hall participants, who encompassed a wide variety of stakeholders -- advertisers, device manufacturers, telecommunications carriers, aggregators, consumer advocates, law enforcers and regu­lators -- all evinced a keen interest in protecting consumers in the rapidly growing mobile marketplace.

"The FTC staff applauds the commitment of the mobile industry to address consumer protection chal­lenges . At the same time, the FTC staff is committed to policing the wireless space to ensure consumer protections are in place."

As per Ms. Troutman, the wieless industry is begging for this type of regulation."

Due to the lack of guidelines and regulations designed to protect both customers and businesses, a lot of companies today in the U.S. are hesitant to start working or building in this mobile venue for fear of upsetting their customers, partners or affiliates.

"Additionally, with mobile commerce just beginning to emerge in the marketplace and about to explode, companies need the reassurance that they are indeed following a guideline set out by the FTC that will potentially give them some forms of indemnification from law suits about usage of the medium and give them more consistency when working between carriers," Ms. Troutman said.

"Mobile commerce to date has been mostly utilized through the cell phone bills in the U.S.," she said. "With defined regulations in place, I feel companies will indeed start to utilize this rapidly growing market and find benefits, as long as they can move between the carriers and aren't locked into the use through just one carrier."