A recent enforcement action taken by the Federal Trade
Commission ("FTC") to shut down a marketer using text
messages highlights the need to be mindful of the law and
regulations that govern mobile marketing. On February, 23,
2011, the FTC asked a federal judge to shut down an operation that
allegedly blasted consumers with millions of illegal spam text
messages. Although the case is many respects a "run of
the mill" spam case, what makes this case unique is the
services promoted were not those of the sender. Rather, the
messages were sent by a lead generator and offered loan
modification assistance, debt relief, and other services. The
FTC is asking the court to freeze the defendant's assets with
charges that he violated the FTC Act and the CAN-SPAM Act
– a law that sets the rules for commercial email.
With the rapid proliferation and use of mobile communication
devices, mobile marketing is an effective means of capturing the
eyes and ears of the consuming public; however, it is a regulated
media and has come under scrutiny. Mobile marketing has at
times outpaced regulation, but lawmakers have enacted laws to keep
pace with innovation, and federal and state consumer protection
agencies and private plaintiffs have stepped-up enforcement.
Companies seeking to generate or purchase leads from mobile devices
must be cognizant of the regulatory – and self-regulatory
– landscape governing mobile marketing.
The lead generation industry has always been on the cutting edge of
marketing and promotional strategies and practices. Here are
some tips on legal considerations for lead generators using mobile
marketing to help avoid the issues in the enforcement action
discussed above:
Federal Laws
The FTC and the Federal Communications Commission
("FCC") are the primary federal agencies regulating
mobile marketing. Like any advertising and marketing, mobile
marketing is subject to the FTC Act and its prohibition on unfair
and deceptive advertising and marketing.
The FTC's Telemarketing Sales Rule ("TSR") prohibits
prerecorded marketing calls to consumers without the call
recipients' prior express written agreement. Under the
TSR, prerecorded marketing calls must make certain disclosures and
provide a specific type of opt-out mechanism that the call
recipient can use to be placed on the marketer's internal
do-not-call list. These consent, disclosure, and opt-out
requirements apply regardless of whether a marketer has an existing
business relationship with the called party.
FCC regulations under the Telephone Consumer Protection Act
prohibit all calls to wireless devices made using an automatic
telephone dialing system or an artificial or prerecorded voice,
unless the caller has obtained the called party's prior express
consent or there is an emergency situation. The FCC has
proposed to harmonize its regulations regarding prerecorded calls
with the FTC's rules.
The FCC and courts have stated that the FCC's rules regarding
calls to wireless devices apply to both voice and text calls,
including short message service ("SMS") calls and text
messages sent internet-to-phone or internet-to-phone. FCC
regulations also apply to Mobile Service Commercial Messages
(MSCMs) – which essentially are email messages sent to an
email address on an Internet domain of a wireless carrier.
Most wireless carriers maintain an Internet domain name that can be
used to send MSCMs to the wireless devices of users on their
networks. MSCMs that are ultimately delivered to wireless
devices may be considered "calls" under applicable FCC
regulations restricting calls to wireless devices when the calls
are sent using an automated system or prerecorded or artificial
voice.
FTC and FCC Do Not Call Rules prohibit marketers from making
telephone solicitation calls to any residential telephone number,
including any non-business wireless number, that is registered on
the National Do Not Call ("DNC") Registry, unless the
consumer has provided express written consent to be called or the
marketer has an established business relationship with the call
recipient. To help avoid placing a marketing call to numbers
listed in the national DNC Registry, marketers should first
"scrub" their outbound calling lists against the national
DNC Registry to remove any names that appear on the list.
Marketers can access the DNC Registry, for a fee, through the
FTC. In fact, federal DNC rules require that marketers check
the DNC Registry for updates once every 30 days and that marketers
scrub their lists against the list within 31 days of making any
solicitation. Companies marketing by phone must also maintain
a company-specific DNC list, which must include consumers who
requested not to receive future marketing calls from the
company.
Identifying wireless numbers can be difficult. Local number
portability ("LNP") allows subscribers to transfer (i.e.,
"port") their wireline numbers to wireless devices and
vice versa, which can make it difficult for marketers to identify
recently ported numbers. The FCC has created a safe
harbor for marketers who unknowingly call a wireless number that
has been ported from a wireline service within 15 days prior to the
date of the call. Moreover, a division of the Direct
Marketing Association offers the Wireless-Ported Numbers File,
which updates the list of ported numbers on a daily basis.
Marketers can use the Wireless-Ported Numbers File on a regular
basis so that, in the event the marketer has taken appropriate
steps to avoid calling wireless numbers but inadvertently places
calls to one or more wireless numbers, the marketer can take
advantage of the FCC's safe harbor.
In addition, the federal Controlling the Assault of Non-Solicited
Pornography and
Marketing Act ("CAN-SPAM Act") applies to commercial
email messages, including text messages, SMS, and MSCMs, sent to an
address that includes a domain name posted on the FCC's
wireless domain list for at least 30 days before the message is
sent. This list is available on the FCC's website.
The CAN-SPAM Act prohibits sending commercial email messages to
wireless devices unless the recipient has provided prior express
authorization to receive such messages from the sender. This
authorization may be obtained orally or in writing. Any prior
express authorization given by consumer will be interpreted
narrowly. It will not necessarily be extended to affiliates
or partners, and authorization given to the sender of a message
does not entitle the sender to disseminate messages on behalf of
third parties. Further, a consumer's prior express
authorization for one type of email/text message does not
necessarily provide consent for other types – for
example, consenting to news updates is not the same as consenting
to receiving electronic coupons. The CAN-SPAM Act also
requires that all commercial emails include certain specific
disclosures and provide a mechanism by which consumers can opt out
of receiving future commercial emails from the marketer. The
statute also prohibits commercial emails that contain false or
misleading subject lines or "header" information; header
information includes the source, destination, and routing
information attached to an email, as well as the originating domain
name and originating email address, and the "from"
line.
In addition to federal laws that specifically regulate mobile
marketing, lead generators should be aware of broader advertising
and marketing laws, including the Federal Trade Commission Act
– which prohibits deceptive or unfair commercial acts and
practices – and the FTC's Mortgage Assistance Relief
Services Rule – which applies to those who offer mortgage
relief services, including lead generators in that space.
State Laws
States have various laws applicable to mobile marketing, including laws governing telemarketing, email marketing, and advertising generally. States have brought enforcement actions against companies engaging in mobile marketing for alleged violations of applicable laws. The Florida Attorney General's Office in particular has been very active in the mobile marketing area. In May 2008, the Florida Attorney General's Office announced that it was developing a "zone system" intended to dictate where material terms should be disclosed in an advertisement sent to mobile devices. In addition, many state laws may be enforced by individual consumers and through class-action litigation, which for some plaintiff's attorneys has created an entire cottage industry.
Industry Standards
Several industry groups have adopted guidelines for mobile
marketing that require compliance with the applicable federal laws
and recommend standards for mobile marketing practices in specific
areas. The main principle among industry standards, as well
as pertinent laws, is that consumers should have choice as to the
marketing content that they receive. In other words,
marketing messages generally should be delivered to consumers only
if they have consented to receiving such
communications.
Among the industry organizations that have established standards
for mobile marketing is the Mobile Marketing Association, whose
Consumer Best Practices Guidelines and other guidance
documents set forth both best practices for a wide range of mobile
marketing activities, including, among other things, obtaining
consumer consent, disclosing terms and conditions of an offer, and
sweepstakes and contests offered through mobile ads. The
Direct Marketing Association's Guidelines for Ethical
Business Practice provide comprehensive guidelines for ethical
and legal conduct for various types of direct marketing, including
mobile marketing. The CTIA – The Wireless
Association also has guidelines relating to mobile marketing,
although its guidelines primarily address the obligations of
wireless carriers.
* * * * * * * * * *
Mobile marketing presents lead
generators and lead purchasers with opportunities to directly reach
consumers wherever they may be – on the go, at home, at
the office, etc. As such, marketing to mobile devices can
help a company accumulate leads at profitable conversion
rates. But mobile marketing is not without legal risks.
Lead generators should be mindful of the regulatory "lay of
the land" to help effectively mitigate such risks and protect
their business interests.
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.