Navigating the legal aspects of mobile marketing

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We have rapidly moved into the wireless era. Along with it, marketing opportunities abound for the creative. Many believe it to be the Wild West with little or no regulations.

In reality a veritable alphabet soup of regulatory agencies, statutes and guidelines must be considered when undertaking a mobile marketing campaign, including the FTC, FCC, TCPA, ATSR, DNC, CAN-SPAM and MMA.

SMS Marketing. The Mobile Marketing Association (MMA) offers best practice guidelines for mobile content services. The guidelines were developed by a collaboration of the major carriers and they require adherence to them as a condition of service. In general, when promoting programs via mobile phones, content providers should ensure all material clearly indicates whether the service is a subscription. The program's terms and conditions, the pricing information, additional fees, the subscription term and billing interval also must be disclosed. Consumers should be informed whether the charge will appear on customers' mobile phone bills or will be deducted from their prepaid balances.

For programs charging the subscriber a normal rate for text messaging, only a single opt-in is required. This single opt-in only applies to the specific program to which a customer subscribed and should not be construed as approval to market other products or services to the customer.

For premium rate programs, a double opt-in is required. Where the premium service is a subscription service, the double opt-in must include identification of the service as a subscription and the billing interval. In addition, subscription periods should be no longer than one month, and prior to renewal of the service (or at least once a month) a renewal message must be sent to the subscriber.

Mobile sweepstakes. There are three elements to an illegal lottery: consideration or entry fee, prize and chance. In order to operate a valid sweepstakes in the United States, it is necessary to eliminate one of these elements. Generally, operators eliminate the consideration. Where entry into a mobile sweepstakes is via premium SMS, you must allow for a free alternative method of entry. Frequently this is accomplished by either providing a toll-free number for entry or by allowing free entry via a Web site. Individuals entering the sweepstakes via the free method must be given the same opportunities to win as those individuals who enter via premium SMS.

In addition, you must provide the complete official contest rules prior to the potential entrant's submission of an entry. Once you commence a sweepstakes, you may not change the rules for that sweepstakes until the conclusion of the contest period. In addition, regardless of the method of entry, states such as Florida, New York and Rhode Island require bonding or registration of the sweepstakes in the event that the aggregate prize value exceeds a particular threshold.

CAN-SPAM. In August 2004, the FCC voted to amend the CAN-SPAM Act of 2003 to outlaw all commercial e-mail messages to mobile phones and pagers unless the device owner has given "express prior authorization." The ban does not cover "transactional or relationship" messages, or notices to facilitate a transaction already entered into with a customer. All authorized transactional or relationship messages must still comply with CAN-SPAM requirements. Consumers must be allowed to opt-out of receiving future messages the same way they opted-in. Senders have 10 days to honor opt-out requests.

In order to facilitate the ban, the FCC has compiled a list of domain names used by wireless service providers to which marketers may not send commercial e-mail messages. Senders have 30 days from the date the domain name is posted on the FCC site to stop sending unauthorized commercial e-mail to addresses containing the domain name. Violators would be subject to fines of up to $6 million and up to one year in jail for some spamming activities. Carriers and consumers are provided a right to bring lawsuits against alleged violations of the Act.

Telemarketing. Today, many people forgo a home telephone number or landline in favor of a mobile number. As a result, the telemarketing requirements originally envisioned as applying to landlines now apply equally to mobile numbers. Personal mobile phone users can add their numbers to the National Do Not Call Registry. Telemarketers are required to scrub their lists against the registry at least once every 31 days.

In addition, telemarketers must be mindful of requirements contained in both the Amended Telemarketing Sales Rule ("ATSR") and the Telephone Consumer Protection Act ("TCPA"). In addition to FCC regulations that prohibit the use of autodialers to call or send text messages to mobile phone numbers, many states have their own rules and regulations on this and other telemarketing issues.

Deceptive trade practice law. The Federal Trade Commission and state attorneys general are given broad powers by legislatures to curb unfair and deceptive trade practices. These laws and regulations apply to mobile marketing campaigns. The general guideline is that all material terms and conditions of the offer must be "clearly and conspicuously" disclosed to the consumer prior to the buying decision.

In practice, the definition of clear and conspicuous disclosure is too often a judgment call. The balancing of the desire to capture a potential customer's attention, while providing adequate disclosure, can be even more challenging in the mobile context due to the lack of space. This leaves the marketer with the quandary of attempting to promote a product while at the same time not having the advertisement become merely a legal disclaimer.

This is only a brief overview of some of the agencies and regulations affecting mobile marketing, and a few of the many pitfalls to be avoided when you decide to market products or services via mobile phones.

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