Presenting a live 90‐minute webinar with interactive Q&A
Marketing via Mobile Devices:
Enforcement and Litigation Trends
Navigating Industry Standards and Evolving Regulations From Multiple Federal and State Agencies T d ’ f l f1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific
TUESDAY, OCTOBER 26, 2010
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Marketing via Mobile
Devices: Enforcement
d Liti
ti
T
d
and Litigation Trends
Gabriel H. Karp
[email protected] g p@ p
Executive Vice President & General Counsel, ePrize
Mobile Marketing: Events
www.eprize.com
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Mobile Marketing: Voting
www.eprize.com
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Mobile Marketing: QR Codes
Starbucks mobile coupon loyalty program in South America
Call-to-action urged consumers to text
keyword STARBUCKS to short code 80080 to get a WAP link to download a buy-one-get-one-free 2D bar code mobile coupon.
In-store signage: text keyword VENTI to short code 80080 to opt in to receive
various discounts and offers for coffee-size various discounts and offers for coffee size upgrades.
Mobile Marketing: Location Based
Location-based services (LBS) makes use of the GPS
functionality available on smart phones to determine a
consumer’s location.
With this information, marketers can motivate consumers to visit retail stores in the area and
retail stores in the area and
incent them to make purchases or play games incorporating their friends and participating p p g brands.
www.eprize.com
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www.eprize.com
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Mobile Users Interested in Text Offers
www.eprize.com
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Marketing via Mobile Devices:
Enforcement and Litigation Trends
Melissa Landau Steinman mlsteinman@Venable com [email protected]
October 26, 2010
M bil M k ti O i Mobile Marketing Overview
One Overriding Principle: The Customer Must be in Control of the Relationship
Statutes/Regulations that Could Apply to Mobile Marketing
The Telephone Consumer Protection Act of 1991 (“TCPA”) and FCC p ( ) Rules implementing the TCPA
The Federal Trade Commission Act (“FTC Act”) and the
Telemarketing Consumer Fraud and Abuse Prevention Act and implementing regulations, including Telemarketing Sales Rule and Do-Not-Call List
The Controlling the Assault of Non-Solicited Pornography and Marketing Act (“CAN-SPAM Act”)
Federal and State Laws Regulating Prize Promotions
State laws regulating telemarketing, email marketing and privacy
Industry self regulation (e.g., MMA US Consumer Best Practice Guidelines for Cross-Carrier Mobile Content Programs, DMA and other industry guidelines)
18 Customer Proprietary Network Information (“CPNI”) Rules
Key Areas of Potential Liability
Key Areas of Potential Liability
Mobile Marketing: Recent Litigation and
2008: Timberland Co and GSI Commerce settled
Mobile Marketing: Recent Litigation and
Settlements
2008: Timberland Co. and GSI Commerce settled
charges under the TCPA for unsolicited text
messages advertising Timberland’s holiday sale.
– Settlement: $7 million to the class and $150 per plaintiff.
2009: Simon & Schuster was sued for TCPA
violations for sending text messages promoting the Stephen King novel Cell.
– Settlement: $10 million to the class and $175 per plaintiff
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p
Recent Litigation under TCPA
Recent Litigation under TCPA
Lozano v. Twentieth Century Fox Film Corpy p (. (N.D. Ill 2010). )
» District Court rejected defendant’s argument that TCPA only prohibits calls that result in a charge to the recipientp
Espinal v. Burger King Corp. (S.D. Fl 2010)
October 13, 2010: Federal Judge approved a class-action settlement of $510K
Espinal alleged that Burger King violated the TCPA by
Espinal alleged that Burger King violated the TCPA by
sending unsolicited text advertisements to thousands of cell phones nationwide
The reply “stop” feature of the promotion did not function. BK will pay $250 to each class member who received an
unauthorized text message that related to BK promotion unauthorized text message that related to BK promotion
BK agreed to curb its sending of unauthorized
text messages in the future
Marketing via Mobile Devices
Marketing via Mobile Devices
Enforcement and Litigation Trends
October 26 2010
October 26, 2010
Darren A. Bowie
Legal Director, North America
Nokia Inc.
Mobile Marketing – Which Rules Apply?
• Federal Trade Commission Act
• State Unfair and Deceptive Acts or Practices Statutes
• 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 Communications Commission
( ) p g
(“FCC”) rules
• The Telephone Consumer Protection Act of 1991 (“TCPA”) and the corresponding FCC rules
• Do Not Call Rules
• Customer Proprietary Network Information (CPNI) rules
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Federal Trade Commission Act and State UDAP
Statutes
• Section 5 of the Federal Trade Commission Act prohibits unfair or p deceptive acts or practices in or affecting commerce
• State Attorneys General also enforce state statutes that prohibit unfair and
FTC Act and State UDAP Statutes: The Basic
Rules Still Apply
pp y
• Disclosure of material terms must be “clear and conspicuous”
• Consider “the Four Ps”
• The disclosure should be Prominent enough for consumers to read easilyThe disclosure should be Prominent enough for consumers to read easily.
• The Placement of the disclosure should be designed to ensure consumer will read it
read it.
• The disclosure should appear in close Proximity to the claim that it’s l i i
explaining.
• The Presentation of the disclosure should be designed to ensure consumers
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Telephone Consumer Protection Act (TCPA)
• TCPA prohibits marketers from sending messages to wireless devices
i t ti t l h di li t (“ t di l ”) ith t “ i
using an automatic telephone dialing system (“auto-dialer”) without “prior express consent”
• TCPA applies whether a text message is sent internet-to-phone or phone-to-phone. Jaffe v. Acacia Mortgage Corp., 121 P.3d 831 (Ariz. 2005), cert.
TCPA: What is an “automatic telephone dialing
system”?
y
• Important Ninth Circuit ruling in Satterfield v. Simon & Schuster (June 2009), which clarified the construction of the Telephone Consumer Protection Act (TCPA)
Protection Act (TCPA)
• Appeal from a summary judgment decision by the district court finding that a text messaging campaign did not violate the TCPA because:
• (1) a text message is not a "call" under the TCPA;
• (2) the equipment used to send the message was not an "autodialer"(2) the equipment used to send the message was not an autodialer
because it was not used to generate random or sequential numbers to call for purposes of sending the text messages; and
• (3) the sender of the text messages had express prior consent because it(3) the sender of the text messages had express prior consent because it had consent to send messages from its "affiliates" and "brands."
TCPA: What is an “automatic telephone dialing
system”?
y
• The Ninth Circuit reversed and remanded, finding that:
• (1) the FCC’s construction of the TCPA to include a text message as a
" ll" bl t ti f th TCPA
"call" was a reasonable construction of the TCPA;
• (2) under the TCPA, an autodialer includes equipment with the "capacity" to generate random or sequential numbers, whether or not that capacity is in use
• On remand the district court is required to conduct fact finding on whether the equipment in question had such capacity; and
• (3) there was no “express prior consent” as required by the TCPA where customers agreed to receive messages from an "affiliate" or "brand" and the messages sent were from a company with no corporate relation to the
d d t t f b d i t d ith d
TCPA: What is an “automatic telephone dialing
system”?
y
• What is the impact of the Ninth Circuit’s ruling?
M i l d t t t t " ll " f TCPA d
• Many companies already treat text messages as "calls" for TCPA purposes, and the Mobile Marketing Association (MMA) Consumer Best Practices Guidelines also treat text messages as "calls" under the TCPA
• The Ninth Circuit confirmed that "autodialer" is defined broadly to include any equipment with the "capacity" to generate random or sequential numbers for sending messages
sending messages
• To the extent companies have obtained customer opt-in consent to receive
messages from "affiliates" or "brands," they should review their practices to ensure the source of the messages is an "affiliate" or "brand" under the Ninth's Circuit's definition of those terms
• Consider whether a "powered by XXX“ disclaimer is sufficient given the Ninth Circuit’s ruling
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TCPA – Compliance Tools
• The Wireless Block Identifier Service identifies for the marketing
it th b th t h b i d bil h
community those numbers that have been assigned as mobile phone numbers - numbers they may not call without express consent from the holder of a number.
• The Wireless Ported Number File identifies land-based phone numbers that have been ported to cell phone numbers.
• Direct Marketing Association Wireless Marketing Compliance Chart
Other Do Not Call Issues
• Calls that do not use an auto-dialer are subject to Federal, State, and company specific Do Not Call Rules, and the Direct Marketing
Association’s telephone preference program Association s telephone preference program.
• TCPA also prohibits marketers from sending messages to any number that is on the National Do Not Call Registry unless the marketer has
• an established business relationship with the consumer orp • obtained prior express invitation or permission
• (See above: if an auto-dialer is used, prior express consent is required)
Customer Proprietary Network Information (CPNI)
• The Federal Communications Act (FCA) and related Federal Communications
Commission (FCC) regulations limit the manner in which mobile carriers can share confidential consumer data — referred to as Customer Proprietary Network p y
Information (CPNI) — with their affiliates and with third parties.
• CPNI consists of call-specific data such as telephone numbers called, call duration, p p , , and other customer-specific usage information.
• FCC issued new CPNI rules in April 2007 - disclosure of CPNI to joint ventureFCC issued new CPNI rules in April 2007 disclosure of CPNI to joint venture
partners or independent contractors for marketing purposes is now subject to opt-in approval from customers. (Petition for review denied by DC Circuit, February
CAN-SPAM
Controlling the Assault of Non-Solicited Pornography and Marketing Act 15 U.S.C.A. § 7701 et seq.
www.eprize.com
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CAN-SPAM Does not apply to SMS
CAN-SPAM’s definition of an “electronic mail message” necessarily excludes SMS:
“The term 'electronic mail
message' means a message
g
g
sent to a unique electronic
mail address.”
CAN-SPAM Does not apply to SMS
“The term 'electronic mail address' means a destination, commonly expressed as a string of characters, consisting of a unique user name or mailbox (commonly referred to as the 'local part') and a reference to an Internet domain (commonly and a reference to an Internet domain (commonly referred to as the 'domain part'), whether or not displayed, to which an electronic mail message can be sent or delivered.“
-15 U.S.C.A. § 7702(5)
In other words, the typical email address format: , yp
[email protected]
www.eprize.com
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CAN-SPAM Does
CAN-SPAM Does
not apply to SMS
CAN SPAM d t l t CAN-SPAM does not apply to
SMS which reach consumers only through their 10 digit
CAN-SPAM Applies
to Emails Sent to
Wireless Domains
Wireless devices also can receive email sent to the following
destination format:
bil b @ bil i [email protected]
The FCC has banned these emails
Wireless service providers must publish all internet domain names used to transmit electronic
messages to wireless devices at:
www.fcc.gov/cgb/policy/DomainNameDo wnload.html
www.eprize.com
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CAN-SPAM Compliant Emails
Must have accurate “from” line 15 U.S.C. § 7705 (a)(1)
Must have accurate “subject” line 15 U.S.C. § 7705 (a)(2)
Must include internet based opt-out mechanism 15 U.S.C. § 7705 (a)(3)(A)
Must not send email to those who have already opted out
(10 days)
I d
t
St
d
d
d B
t
Industry Standards and Best
Practices
Guidelines Issued by the Direct Marketing Association (“DMA”) Mobile
Guidelines Issued by the Direct Marketing Association ( DMA ), Mobile Marketing Association (“MMA”) and CTIA, The Wireless Association
Address issues such as:
Address issues such as:
– Security
• Privacy Policies
P i /D t B h
• Privacy/Data Breaches
– Notice
• Choice & Consent • Opting Out
• Consent is Program-Specific
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Mobile Marketing Association Guidelines
The MMA’s U S Consumer Best Practices Guidelines for
The MMA s U.S. Consumer Best Practices Guidelines for
Cross-Carrier Mobile Content Programs last updated June
2010.
Address mobile-specific marketing issues such as:
– Deactivated and recycled numbers
– Standard rate single opt-in and premium rateStandard rate single opt in and premium rate double opt-in via SMS
MMA’s “Mobile Advertising Guidelines”
Comprehensive technically oriented guidelines
Comprehensive, technically-oriented guidelines
for creating ads, including:
– Downloadable applications
Downloadable applications
– Formats
– Dimensions
– Aspect ratios
MMA’s Program Specific Publications
Mobile Marketing Sweepstakes and Promotions Guide
Di
t M
k ti
A
i ti
(“DMA”)
Direct Marketing Association (“DMA”)
Guidelines for Ethical Business Practice
Provide guidelines for ethical and
legal conduct for different types of
direct marketing using different
vehicles, including sweepstakes
and other types of promotions
CTIA—The Wireless Association
CTIA G id li i il dd d ti f i l
CTIA Guidelines primarily address duties of wireless
carriers.
Several potentially relevant documents: Several potentially relevant documents:
Opt-in Consent
DMA suggests single opt in
DMA suggests single opt-in.
MMA suggests single or double opt-in, depending on the
circumstances:
– Double opt-in for promotions where subscriber incurs a charge that is higher than usual (e.g., $0.75 per message).
– Single opt-in for promotions where the customer receives no charge or where subscriber incurs standard text message charges (e.g., $0.75 per message).
Consent
Content providers must obtain specific express approval
Content providers must obtain specific, express approval from subscribers before sending them commercial SMSs and other content.
MMA references how to do this (e.g., “text YES to 474747”)
When keywords (such as YES and STOP) are referenced in
Opt-in Consent
The goal of any opt-in is to clearly communicate to the
subscriber the financial obligation they are about to incur by entering the program
entering the program.
MMA recommends specific language: “Message and data fees
may apply.”
Provider should also communicate that the subscriber may
revoke his authorization at any time, and how to do it (“Text STOP to stop receiving messages”), and how to get help (e.g., STOP to stop receiving messages ), and how to get help (e.g., “Text HELP for help”).
Selling mobile opt-in lists is prohibited.
Mobile-Specific Marketing
These organizations incorporate into their guidance best
These organizations incorporate into their guidance best practices and legal compliance requirements in specific areas such as:
– Advertising to Children – Word-of-Mouth MarketingWord of Mouth Marketing – Affiliate Marketing
Special Issues for Mobile/Wireless
P i
P
ti
Prize Promotions
Lotteries are prohibited under federal laws and
Lotteries are prohibited under federal laws and
the laws of all fifty states, usually as a form of
gambling
gambling.
A lottery has three elements: (1) prize, (2)
chance, and (3) consideration.
,
( )
Costs incurred as a result of using a mobile
device to enter a promotion (e.g., text messaging
p
( g
g g
fees) may constitute consideration.
American Idol/Deal or No Deal Cases
In 2007, class action cases challenged the text message games in TV shows Deal or No Deal, American Idol, 1 vs. 100, and America’s Got
Talent Talent
– Georgia: Hardin v. NBC Universal, Inc. et al., 660 S.E.2d 374 (Ga. 2008) – California: Bentley v. NBC Universal, Inc., No. 2:07-CV-03647 (C.D. Cal.);
Herbert v. Endemol USA, Inc., No. 2:07-CV-03537 (C.D. Cal.); and Cunningham v. Endemol USA, Inc., No. 2:07-CV-3643 (C.D. Cal.)
Audience members could enter the game via text message, but would incur a $0.99 premium text message fee. They could enter for free via the Internet.
Text Message Promotions
Text Message Promotions
Text message promotions should include a free AMOE
Text message promotions should include a free AMOE – consumers should not be required to pay text messaging fees or otherwise incur any costs to enter.
The California class action raises questions as to whether even a free AMOE will be sufficient. Until it is resolved, even a free AMOE will be sufficient. Until it is resolved,
companies should at minimum (a) avoid any method of entry that has a premium cost associated with it unless there is some value associated with the charges (a ringtone a t shirt some value associated with the charges (a ringtone, a t-shirt, etc.) and (b) ensure the availability of a free AMOE.
Disclosure of Prize Promotion
Disclosure of Prize Promotion
Terms and Conditions/Registration
As with all promotions must disclose Official Rules As with all promotions, must disclose Official Rulesprior to entry; disclosure is complicated by medium (smaller screen, etc.)
At minimum, need link to complete rules from ads on
mobile screen.
Ads in other media should make more complete
False Advertising
False Advertising
Section 43(a) of the Lanham Act prohibits false statements made ( ) p in commercial advertisements that are likely to deceive consumers and likely to cause injury to the plaintiff.
State “Little FTC” Acts prevent false and misleading
t t t / f i d d ti t d ti
statements/unfair and deceptive trade practices.
May be applied to false and misleading statements in text messages; have not generally been used this way to date.
Elements of a Lanham Act/False Advertising Claim Elements of a Lanham Act/False Advertising Claim
1. Defendant made a false or misleading
statement of fact in a commercial advertisement about a product; advertisement about a product;
2. Statement either deceived or had the
capacity to deceive a substantial segment of potential consumers;
3. Deception is material, in that it is likely to
influence the consumer’s purchasing decision;
4. Product is in interstate commerce; and
5. Plaintiff has been or is likely to be injured as
Advocacy Issues
Advocacy Issues
Some advocacy groups have expressed opinions in the mobile
Some advocacy groups have expressed opinions in the mobile marketing/privacy space. (ACLU, Center for Digital Democracy, Electronic Frontier Foundation, Consumers Union, Privacy Rights Clearinghouse)
In 2010, the Wall Street Journal began running a series of articles called ‘What They Know’
http://online.wsj.com/public/page/what-they-know-digital-privacy.html
The series addressed the collection of personal data on websites andThe series addressed the collection of personal data on websites and on-line ads, online behavioral advertising and GPS tracking technology in cell phones.
Advocacy Issues
Advocacy Issues
Since the article 17 consumer advocacy groups sent a Since the article, 17 consumer advocacy groups sent a
letter to the Chairman of the FTC asking the
Commission to propose a comprehensive statutory and regulatory solution to address the deficiencies in and regulatory solution to address the deficiencies in American’s privacy rights.
In August, 6 organizations sent letters to the Chair and
Federal Legislation - House
• H.R. 5777 “BEST PRACTICES Act”
• Congressman Rush • Online Privacy
• In Committee
• H.R. Draft “Boucher Bill”
• Congressman Boucher • Congressman Boucher • Online Privacy
• Not introduced
Federal Legislation - Senate
• S.3579 Data Security Act of 2010 • Senator Carper
• Data Security/Data Breachy • In Committee
• S.139 Data Breach Notification Act • Senator Feinstein
• Data Breach
• Out of Committee
• S.1490 Personal Data Privacy and Security Act of 2009 • Senator Leahy
FTC Workshop: “Mapping the Mobile
Marketplace” Staff Report Released April 2009
p
p
p
•
http://www.ftc.gov/opa/2009/04/mobilerpt.shtm
• Conclusions – FTC will:
• Continue to monitor cost disclosures and work with industry to improve self-regulatory enforcement
regulatory enforcement
• Continue to monitor the impact on consumers of unwanted mobile text messages, malware, and spyware, and take law enforcement action as needed.
• 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.
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Children’s Online Privacy Protection Act (COPPA)
• FTC Review of COPPAR dt bl h ld J 2010 R i i
• Roundtable held June 2010- Review ongoing
• Several issues under review, e.g.:
• What implications for COPPA enforcement are raised by mobile communications, interactive television, interactive gaming, or other similar interactive media.
• Whether operators have the ability to contact specific individuals using information collected from children online, such as persistent IP addresses, mobile geolocation data, or information collected in connection with behavioral advertising, and
FTC Privacy Roundtables 2009-2010 / Privacy
Report
p
• FTC held 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 business practices that collect and use consumer data.
• Social networking
• Cloud computing
• Online behavioral advertising
• Mobile marketing
• Mobile marketing
• Collection and use of information by retailers, data brokers, third-party applications, and other diverse businesses.
• FTC Report expected in 2010.
FCC National Broadband Plan – March 2010 –
Privacy Components
y
p
• The Plan calls on Congress, the FTC, and the FCC to clarify the relationship between users and their online profiles.
• The Plan proposes that individuals should be given control of the "digital profiles" created by a variety of firms playing different roles in the broadband ecosystem
ecosystem.
• The Plan calls for "[c]lear and strong privacy protections that disclose how and
h d l t d t h d ith [ i t ] i "
when users can delete or manage data shared with [private] companies."
• The Plan calls on Congress to enact legislation designed to spur
FCC National Broadband Plan – March 2010 –
Privacy Components
y
p
• The Plan calls on the FTC and the FCC to work together to develop rules
i i i f d t f di l b b db d i id
requiring informed consent for disclosure by broadband service providers of more sensitive information such as account and usage information.
• The Plan calls on the federal government, led by the FTC, to devote additional resources to combating identity theft.
• The Plan calls for coordinated efforts by federal agencies to promote consumer online security in support of national security policy.
• The Plan calls for creation of an interagency working group to coordinate child online safety and literacy work.
Other Relevant FCC Mobile Wireless Proceedings
• “Net Neutrality” Proceedings• Serving and Protecting Children and Empowering Parents in an Evolving Media Landscape
Department of Commerce – Notices of Inquiry
• Information Privacy and Innovation in the Internet Economy (April 2010)
• “the impact of current privacy laws in the United States and around the world on the pace of innovation in the information economy.”
• “whether current privacy laws serve consumer interests and fundamental
d ti l ”
democratic values.”
• Cyber security, Innovation, and the Internet Economy (July 2010)
• Global Free Flow of Information (September 2010)
• Copyright Policy (October 2010)
So Your Client Has an Idea (at 5pm on Friday):
“We’re running a promotion
to support the release
to support the release
of our movie on DVD.”
Sweepstakes and Instant Win Game with 3 ways to enter: Text the word “OSCAR”
Prizes Include:
Text the word OSCAR
to the short code 77493 (PRIZE)
“Check-in” at participating retail locations where DVD sold
DVD’s (mailed to home address)
DVD’s issued in the form
