UK: SMS Legal Issues

Last Updated: 29 October 2001
Article by Jonathan P. Armstrong

SMS is for many the surprise success story of m-commerce. But like many surprises there are issues that need to be reviewed after the initial euphoria is over. The legal issues surrounding SMS come into this category.

In the 5 years since e-commerce has really taken off in the UK many of us have become used to the same legal issues arising with e-commerce over and over again. The same concerns find themselves replicated in m-commerce and even the limited 160 characters of SMS messaging can cause problems.

Copyright

One of the great myths of business, probably coming just after 'the cheque is in the post' is the theory that the internet is copyright free. Similarly if you take text, sound or images and send them over SMS you're likely to be infringing someone else's intellectual property rights. SMS is used as the tool for abuse throughout the UK with dodgy looking logos and ring tones available from most of the tabloid newspapers - and some less reputable sources. Brand owners are putting resource in to police this and certainly if the owners of the rights behind ringtones like Mission Impossible start and take enforcement action their royalties could stretch into the tens of thousands for replays on the Circle Line alone.

Location based services

One of the main areas of SMS regulatory activity concerns geographical location. For many SMS operations it is this ability to accurately pinpoint a handset around the world that makes the technology so attractive. The most-used examples of possible success for pure SMS operations such as incentivising people to enter the restaurant they are just about to walk past, to work out their location and find them a nearby hotel for the night, or even to tell them that the attractive blonde standing at the other side of the bar is looking for a date, are likely to meet with regulatory disapproval.

Already in the US the picture seems confused. Whilst the Federal Communications Commission (FCC) insists on the ability to pinpoint a caller's location as part of their regulatory regime, the Federal Trade Commission (FTC) seemed initially to seek to ban it. The FTC called a meeting in Washington in December with the aim, according to some, of outlawing positioning altogether on privacy grounds. The FTC said that it was concerned because as well as the technology allowing targeted, direct advertising, it could also encroach on privacy rights if people are not given the option of deciding whether they want to be targeted in that way. An outcry in the US forced the FTC to back down at the meeting and adopt a softer line saying that it had no immediate plans for regulation but had called the meeting only 'to educate the commission about what's happening in this space'.

The FTC says in its paper published in January that their aim is to look at m-commerce 'through the lens of consumer protection'. The FTC still says that it is looking to educate itself and that it will not look at enforcement and regulation 'in the short term'. But the spectre of action against geographical positioning remains. The spectre has taken more real form since January with the Acme case in the US. Whilst not strictly using SMS applications the case shows us how geographical location excites the regulators.

The Connecticut department of consumer protection are bringing a prosecution against ACME alleging that they used global positioning to track its cars and that they fined customers $150 every time they exceeded the speed limit for more than 2 minutes. In their defence, ACME say that its contract allows them to fine customers who exceed speed limits and that they use global positioning to ensure its safety rules are enforced rather than to make money. The authorities in Connecticut argue however, that even if such a contractual term is incorporated into the contract with ACME's users it violates the Connecticut Fair Trade Practices Act as it imposes an unfair contractual term. Similar legislation exists in the UK and will be particularly worrying for those offering SMS services to consumers, where the legislation requires a more balanced approach than in B2B agreements. The Connecticut action started after one of ACME's customers brought small claims court proceedings after being charged $450 for 3 incidents of speeding detected by global positioning in the van he rented.

Closer to home The Regulation of Investigatory Powers Act 2000 ("the RIP Act") makes provisions for and about the interception of communications and the acquisition and disclosure of data relating to communications amongst other things. Part 1 of Chapter II of this Act is likely to be implemented in October of this year. This Chapter enables bodies like the police to obtain communications data in circumstances such as prevention or detection of the crime or assessment or collection of tax or duty.

The information can be requested from any telecommunications operator and the data they can request includes personal details of identification, location, times and dates. There is discretion in the Act to pay the operator's costs but this may not necessarily cover all of their costs. In combination with the Act the National Criminal Intelligence Services has recommended that network operators keep all details of phone calls and text messages for seven years. As more of RIP is enforced businesses, particularly those involved in mobile messaging, need to take another look at the implications for their operations.

The Data Protection Act 1998 also has a role to play in SMS. It deals amongst other things with the handling of personal data and as a result SMS operators need to make sure that they have proper consent to hold details and that they keep personal details secure at all times.

Even if geographical location is not involved the sending of SMS messages is a regulated activity and, at the very least, a campaign will require careful planning to stay on the right side of the law. The relevant law is found within The Telecommunications (Data Protection and Privacy) Regulations 1999. Debate exists as to the interpretation of the Regulations and whether they encompass unsolicited marketing by SMS. However, the present Government's stance is that they do and the best practical commercial advice would be that it is sensible to follow this interpretation. At the very least it is important to take specific advice before using SMS for direct marketing purposes, and before obtaining mobile numbers to store for a future campaign.

Hate Mail

Even more worrying that junk texts are the problems posed by hate mail over SMS. Newspapers seem to cover a story a week at the moment and the Government wishes to make it an imprisonable offence to send hate mail by SMS. The Home Office wishes to deter protestors, especially animal rights extremists, who use hate mail to intimidate employees and directors of research companies. On the face of it, this should be good news but there could be a sting in the tail for those who provide the means to send SMS messages. A non SMS case in the UK, Takenaka (UK) Limited and Brian Corfe -v- David Frankl, highlighted the potential costs to employers of identifying who actually sent an e-mail from a particular laptop. We are already seeing cases of disaffected employees coming to Court. Another text related example is the case of R. v. Scott Reid where Reid was sentenced to three months imprisonment by Nottingham Crown Court in August 1999. Reid sent 32,000 text messages to subscribers on the Vodafone network telling them that they had won a Peugeot 106 car and that they had to ring a specific number to claim it. The number he gave was his employer's switchboard. The Court heard that they were brought to a standstill and that BT had to filter its calls for three days. The company estimated that it lost Ł10,000 worth of business as a result. In Court Reid admitted two charges of unlawful modification of computer material and two of unauthorised access to a computer. He also admitted creating a persistent message causing annoyance and asked for other offences to be considered.

The Government's new proposals may result in providers (whether that be network owners or simply employers) investigating, or co-operating with investigations into, this type of allegation. This will inevitably mean that some bear some of the cost of identifying who sent the message.

Messages that aren't hate mail but are defamatory will also be actionable. More worryingly following a line of cases on internet and newsgroup defamation in the UK it's likely to be service providers who are the first target for litigation. When running an SMS service it s important to try and deal with this risk. How you do that will depend on what you plan but detailed access agreements and the possibility of moderation need to be thought through.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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