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Where are the legal minefields in mobile marketing?

NEW YORK ? A panel of lawyers discussed important issues for every mobile marketer during the ?Legal Dos and Don?ts? panel at Mobile Marketing Day, hosted last week by Mobile Marketer and the Direct Marketing Association.

The panel featured Reed Smith lawyer Adam Snukal and Lustigman Firm principal attorney Andy Lustigman, as well as Siteminis chief operating officer Steve Timpson. Mobile Marketer?s Mickey Alam Khan moderated. The agenda included insight into law enforcement related to mobile marketing, important cases and best practices, including tips for mobile contests, sweepstakes and promotions.

?Direct marketers need to understand and embrace the concept that unlike most other forms of direct marketing, this is an opt-in channel,? Mr. Lustigman said. ?Marketers need to be very careful at analyzing exactly what consent the consumer has given to be contacted and not merely accept a third-party's representation that the list is opt-in.?

Enforcement is a partnership between federal and state government agencies, marketing and advertising industry organizations and self-regulatory guidelines outlined by groups such as the DMA and the Mobile Marketing Association.

There are obviously many laws out there, but which rules apply to mobile marketing?

The panelists provided the following list:

  • Federal Trade Commission Act
  • State Unfair and Deceptive Acts or Practices Statutes 
  • The Controlling the Assault of Non-Solicited Pornography and Marketing Act (?CAN-SPAM Act?) and the corresponding Federal Trade Commission (?FTC?) rules
  • The Telephone Consumer Protection Act of 1991 (?TCPA?) and the corresponding FCC rules
  • Do-Not-Call Rules
  • Customer Proprietary Network Information (?CPNI?) rules
  • Industry Guidelines ? e.g., Mobile Marketing Association, CARU, CTIA-The Wireless Assocation, the
  • Direct Marketing Association

Federal Trade Commission
The panelists described the current landscape of the FTC as being characterized by heightened consumer protectionism and an activist philosophy.

Section 5 of the FTC Act prohibits unfair and deceptive acts or practices in or affecting commerce.

The FTC also concerns itself with regulating advertising that uses behavioral targeting.

The panelists claimed that the FTC is seeking a seat at many different industry tables, including financial services, health care, pharmaceuticals and securities.

The FTC has started a series of public roundtable discussions to explore the privacy challenges posed by the vast array of 21st-century technology and business practices that collect and use consumer data.

These include:

  • Social networking
  • Cloud computing
  • Online behavioral advertising
  • Mobile marketing
  • Collection and use of information by retailers, data brokers, third-party applications and other diverse businesses.

Given the FTC Act, which states that disclosure of material terms must be ?clear and conspicuous,? the four P's still apply:

  • Disclosure should be PROMINENT enough for consumers to read easily
  • The PLACEMENT of the disclosure should be designed to ensure a consumer will read it
  • The disclosure should appear in close PROXIMITY to the claim that it is explaining
  • The PRESENTATION of the disclosure should be designed to ensure consumers will understand it If the request is made in writing, it cannot be hidden; printed in small, pale or non-contrasting type; hidden on the back or bottom of the document; or buried in unrelated information where a person would not expect to find such a request.

Authorization or permission obtained through subterfuge is ineffective, such as sweepstakes entry forms.

Consumers must affirmatively consent, such as by checking a box. Marketers cannot set a pre-checked box as a default.

What is legally sufficient consent? It must be clear and conspicuous, it must be received prior to sending a message, specific terms and conditions must be included and there must be the ability opt-out.

There are other issues as well. For example, related to marketing to minors and do-not-call lists blocking access to certain numbers.

Pricing must be clear and upfront. It cannot be in small print or on another portal or landing page, even if there is a link to it on the payment page.

The principle of prominent disclosure of all charges must be followed at all times.

The FTC ran a workshop called ?Mapping the Mobile Marketplace? in April 2009.

At the workshop, the FTC said that it will continue to monitor cost disclosures and work with the industry to improve self-regulatory enforcement.

The commission will continue to monitor the impact on consumers of unwanted mobile text messages, malware and spyware, and take law enforcement action as needed.

The FTC also said that it will expedite the regulatory review of the Children?s Online Privacy Protection Rule (COPPA) to determine whether the rule should in any way be modified to address changes in the mobile marketplace. Review will begin sometime this year.

Federal Communications Commission
The FCC has taken a greater interest in marketing and advertising as they have gone mobile and as targeting mechanisms have grown more sophisticated.

The panels said to be on the lookout for the following, coming soon to a mobile device near you:

  • User search and input
  • Geo-targeting ? Location, Location, Location
  • Coupling location with context
  • Coupling location with behavior
  • Location-sharing capabilities among users and among devices
  • Social networking coupled with location-sharing
  • Surveillance capabilities

The FCC?s Telephone Consumer Protection Act (TCPA) prohibits making ?any call?using any automatic telephone dialing system or an artificial or prerecorded voice?to any telephone number assigned to a?cellular telephone service? or to use ?any telephone facsimile machine, computer or other device to send to a telephone facsimile machine an unsolicited advertisement.?

Judicial interpretation of that law prohibits marketers from sending messages to wireless devices using an automatic telephone dialing system (?auto-dialer?) without ?prior express consent.?

The FCC conducted several wireless inquiries last year, including five between August and October.

So what is on the FCC?s agenda? According to the panelists:

  • Participating in online behavioral targeting discussions
  • ?Consumers should stay alert, recognize the potential risks associated with cyber crimes and take some simple precautions to help reduce their chances of falling victim to scams,? said FCC
  • Chairman Genachowski on Oct. 9, 2009.
  • Implement the Child Safe Viewing Act of 2007 
  • Net Neutrality
  • Use-Based Pricing

Better safe than sorry
There have been various settlements that have marketers on edge, if not downright fearful.

These include a settlement against Verizon Wireless for $1.5 million plus refunds and Satterfield vs. Simon & Schuster, a decision the publisher lost even though the consumer had opted in and the ad was actually deployed by Nextone.

That decision stated that text messages are considered calls under the Ninth Circuit?s interpretation of the TCPA.

Marketers must be extremely careful when running any ?games of chance? such as sweepstakes, random drawings or anything that includes a prize, chance and monetary or non-monetary consideration.

The panelists summed up their presentation with a list of mobile marketing ?Legal Dos and Don?ts?:

  • Obtain express consent to contact and to order
  • Do not assume consent received by others is sufficient consent for you
  • Scrub against DNC/Neustar/Internal lists
  • Provide an opt-out 
  • Use links to include additional disclosures
  • Prominently display recurring charges
  • Provide bona fide value for premium SMS entries
  • Do not overpromise on charitable donations OR ANYTHING ELSE!

?Keep in mind that traditional advertising rules apply even in this new channel and the marketers must be creative in incorporating sufficient disclosures within the limited screen space,? Mr. Lustigman said. "Don't over-promise ? over-deliver."