A Mobile Marketer's Horror Story
When Laci Satterfield’s son answered his mother’s cell phone in the middle of a cold January night in 2006, he heard the following message: “The next call you take may be your last.” Seconds later, when a text message arrived to the same number promoting Steven King’s newest horror novel, The Cell, Ms. Satterfield decided that some advertiser had crossed the line. Simon and Schuster (“S&S”) was that advertiser.
How did S&S obtain Ms. Satterfield’s cell phone number? Several months earlier, Ms. Satterfield enrolled as a user of Nextones, a company that sells custom ringtones, to obtain a free ring tone. During the registration process, she clicked on the opt-in box with the following adjacent message, “I would like to receive promotions from Nextones’ affiliates and brands.” Soon after the events described above transpired, Ms. Satterfield filed a class action lawsuit against S&S, claiming that S&S violated the Telephone Consumer Protection Act.
We’ve written here in the past about the FCC’s Telephone Consumer Protection Act (the “TCPA”), which makes it unlawful to generate automated calls to mobile phones. Previously we discussed the problems that advertisers are experiencing with the porting of numbers from landline to mobile phones and vice versa. Now there is a new issue on the horizon….
When the Federal Court of Appeals for the Ninth Circuit heard Ms. Satterfield’s case, the court dismissed it, finding that the TCPA did not apply to text messages. The court also concluded that since Ms. Satterfield agreed to receive solicitations in return for a free ring tone, the text messages she received could not be deemed illegal SPAM. The court also opined that S&S could not have violated the TCPA as no automatic telephone dialing system (“ATDS”) was ever employed by S&S or its agency (a requirement under the TCPA).
Mobile marketers thought they had dodged a bullet. Until last week.
On June 19, 2009, the Ninth Circuit Court of Appeals rejected all three of the district court’s arguments in a decision that could have a far-reaching impact throughout the mobile marketing industry. The Ninth Circuit dismissed any connection between Nextones and S&S, reasoning that since S&S was never an affiliate of Nextones and The Cell was not a Nextones brand, Ms. Satterfield’s affirmative consent could not be extended to cover text-message campaigns carried out by S&S. Thus, the message was an unsolicited text message and constituted illegal SPAM.
As to whether the system used to call Ms. Satterfield’s phone could be considered an ATDS, the court focused on the device’s capacity, not what it actually did or didn’t do. If a particular system has the capability of storing numbers and automatically dialing them in some programmed manner, then, in the court’s opinion, it is an ATDS for purposes of establishing a TCPA claim.
Finally, the court rejected S&S’s argument that sending the text messages did not constitute a call under the TCPA. Noting that it had no prior case law upon which to base its decision, the court observed that while no definition is ascribed to the word “call” under the TCPA, “[t]he FCC has explicitly stated that the TCPA’s prohibition…‘encompasses both voice calls and text calls to wireless numbers including, for example, short message service (SMS) calls.” The court further noted that in the FCC’s Notice of Proposed Rulemaking of the CANSPAM Act, “the TCPA and Commission rules that specifically prohibit using automatic telephone dialing systems to call wireless numbers already apply to any type of call, including both voice and text calls.”
Should the Court of Appeals decision stand (it can be appealed to the United States Supreme Court), S&S’ potential exposure for a mobile marketing campaign could exceed $100 million.
Why this Matters:
- According to eMarketer, the mobile marketing industry is projecting a spend of more than $7 billion in 2009. Many expect the annual spend will reach $14 billion by 2014. This is the first time a federal appellate court has said that the TCPA applies to text messages.
- Devices that merely have ATDS features and/or are capable of carrying out ATDS functions can be used to build a case under the TCPA, even if those features and functions were never employed by the marketer.
- Content distributors and marketers need to be keenly aware that courts may be more inclined to take a narrow reading of any consumer opt-in with respect to mobile marketing. Solicitations must be closely related to the offers, content and future communications that a consumer elects to receive, and the party sending those communications must have the authorization to do so.
