United States: Mobile Marketing - Legal Do’s & Don’ts

The Burton U.S. Open 2010 Snowboarding tournament featured, in addition to exciting action in the halfpipe and on the slopestyle course, a host of mobile marketing activities. Fans could watch live streaming video of the event on their mobile device by going to Go211's mobile website and they could enter the Corona Extra Burton U.S. Open sweepstakes by sending a text message from their cell phone.

For marketers, complying with the array of laws, regulations and industry guidelines that govern mobile marketing can be as challenging as a cab double cork 1080. Depending on what technology is used, different laws might apply, and mobile marketing can also implicate a variety of unrelated laws, such as the laws that govern telemarketing, privacy and marketing to children. Here is an overview of the legal landscape.

Mobile marketing – essentially any type of marketing or promotion involving a wireless device such as a cellphone or smartphone – includes:

• sending a text message or an email message to a wireless device that advertises or promotes a product, service or event;
• using location-based technology to send a message to a wireless device;
• allowing consumers to purchase something using a wireless device (also called mobile commerce or m-commerce);
• providing coupons that can be accessed and redeemed using a wireless device.

As a starting point, federal and state advertising laws still apply to any message that is considered an advertisement, whether it's broadcast on television or sent as a text message to a cell phone. These laws require, among other things, that claims made in an ad be substantiated, the ad not be false or misleading, certain disclosures be made, and testimonials and endorsements contained in the ad comply with federal rules. There are also state and federal laws that regulate sweepstakes and contests, including how these promotions are advertised and how consumers can enter.

Marketers that send a commercial message to a telephone number (such as a text message sent to a cell phone number) typically must comply with federal telemarketing laws, while a commercial message sent to an email address (even if the recipient reads it on a smartphone such as an iPhone or Blackberry) must usually comply with the CAN-SPAM Act, the federal law governing commercial email. (There is some confusion in this area because of a court decision that said a message sent to an email address can also be considered a "call" under federal telemarketing laws.)

Telemarketing is heavily regulated at the state and federal level. These laws restrict the time of day such calls can be made, require certain disclosures, and prohibit calls made to numbers on the federal Do Not Call Registry unless you have an established business relationship. (Despite Internet rumors to the contrary, the Registry includes land-line and wireless telephone numbers.) In addition, the Federal Communications Commission has clearly stated that text messages sent to any wireless telephone number using an automatic telephone dialing system are prohibited without prior express consent. Since almost all text message marketing uses software that is considered an automatic dialing system, this means a marketer needs to get consent from a consumer before sending a text message containing an ad, and the marketer should retain proof of consent, whether it's in writing, in an email message, or a recording of oral consent.

State and federal laws governing commercial email typically require senders to identify themselves, provide a working opt-out mechanism, honor an opt-out request quickly, and not share an email address of someone who has opted-out of receiving commercial email messages.

There is another layer of regulations designed to protect children from receiving certain types of ads on their wireless devices. Email messages and text messages that advertise certain products or services, such as alcohol, pornography, firearms and tobacco, are not allowed to be sent to contacts (including land-line and cell phone numbers and email addresses) that are registered on "child protection registries" in Utah and Michigan.

In addition to the laws that may regulate mobile marketing, there are industry guidelines that are considered "best practices". The Mobile Marketing Association (MMA) (www.mmaglobal.com ) has issued guidelines on a variety of mobile marketing topics, including privacy, sweepstakes, and marketing to children. Regarding privacy, the MMA suggests that marketers should: ask for and obtain explicit consent for all mobile messaging programs; provide a simple opt-out mechanism; limit the types of messages to those that a consumer has requested; and implement reasonable technical and administrative procedures to protect consumer's information from unauthorized use or disclosure.

The Wireless Association (www.ctia.org ) has also issued guidelines for location-based services. The voluntary guidelines stress notice, consent and safeguarding location-based data. The guidelines apply regardless of the technology or mobile device used, or the business model employed. Specific guidelines suggest that location-based service (LBS) providers inform consumers about how their location information will be used, disclosed and protected, and if the LBS provider later wants to use location information for another purpose not disclosed in the original notice, the LBS provider should provide the consumer with further notice and an opportunity to consent to the use. The guidelines also suggest that LBS providers inform consumers how long any location information will be retained, and that LBS providers that share location information with third parties explain what information will be provided and to what types of third parties so that the consumer can understand what risks may be associated with such disclosures.

Promotions that allow a consumer to subscribe to a service (even if it's free) or purchase something using a wireless device should make clear disclosures about the terms of the transaction. The Florida Attorney General announced a settlement with AT&T Mobility (formerly Cingular Wireless) after the Attorney General received thousands of complaints about billing charges that appeared on consumers' wireless phone bills for "free" content sold by third-parties that customers said they did not authorize and that often resulted in the customers being signed up for monthly contracts for ringtones and horoscopes. AT&T agreed to pay $2.5 million to refund customers who say they did not authorize the charges, and AT&T agreed to spend another $500,000 on consumer education. In addition, AT&T agreed to include certain assurances and requirements in its contracts with third-party content providers such as clear and conspicuous disclosures about the fees involved in any offer, prohibiting the use of the word "free" or "complimentary" or "no charge" unless there is a disclosure in the same sentence about any costs; prohibition of any pre-checked boxes for accepting the terms or conditions of an offer; and mechanisms for cancelling a subscription or disputing a charge.

There has also been litigation relating to sweepstakes that could be entered by sending a text message. Several class action lawsuits were initiated by consumers claiming that these sweepstakes (some of which were tied to television shows) violated state lottery laws or sweepstakes laws because sending a text message usually incurs a fee for the sender, and most sweepstakes laws require that there be a free method of entry that provides the same odds of winning as a method that requires a purchase or a fee to enter. So far, several of these lawsuits have been dismissed.

Conclusion

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.