Reed Smith Attorney, Adam Snukal, quoted in Market Watch
Adam Snukal was quoted in an article which ran on CBS's Market Watch last week. The article, which discusses anti-trust trends within the mobile marketing space, can be accessed here.
What the New Consumer Privacy Bill Means for Data Collection
On Monday, May 10th, 2010, the article "What the New Consumer Privacy Bill Means for Data Collection" appeared on Mobile Marketer, a widely read publication within the mobile marketing and advertising community. The article, written by Adam Snukal, summarizes the proposed privacy legislation introduced in the U.S. House of Representatives last week. If you have any questions about the article or the new bill, please contact Adam Snukal or another attorney within Reed Smith.
Four Tips for Mobile Marketing to Kids
This post was written by Shira Simmonds, President, Ping Mobile.
A 2007 study by the Nielsen Company reported that 35 percent of American "tweens" (kids 8‑12) now own mobile phones. How can we reach them via mobile marketing programs without violating any legal or ethical guidelines?
The answer turns out to be remarkably simple. The potential is enormous for mobile marketing to be used as a learning tool and to promote healthy, educational products and services. There is a tremendous opportunity to use mobile in creative ways that actually support good parenting while teaching kids how to be responsible, discerning consumers.
Here's how:
- Implement safety measures, such as parental consent – Smart kids with cell phones can easily respond to a call-to-action on a cereal box or TV commercial, and opt-in to promotions without their parents' knowledge or consent. As such, advertisers will often be required—or at least strongly encouraged—to add legalese that may range from asking respondents to confirm they are of a certain age, to expressly prohibiting the participation of certain groups from a program or promotion. Sometimes the best approach is to add extra precautions on top of the legal requirements, such as sending a confirmation link to a parent or guardian’s e-mail address before anything is activated. Some mobile phone providers, such as Kajeet, offer computer programs that allow parents to monitor activity on the child's cell phone account.
- Market to both parents and kids by creating a marketing message that would be parent-approved and kid-friendly –If a brand's mobile marketing campaign offers healthy, educational products, such as an opportunity to join a book club, discounts on a local art class or coupons for healthy snacks, parents will be happy to opt-in. No matter how tech-savvy a 12-year-old might be, it's the parents who make the purchase. A brand is basically marketing to a parent via the child's cell phone. Promotions should be created with the parent in mind, but should be designed to appeal to the child.
- Follow all legal guidelines – Ad campaigns and programs targeting children should be analyzed on a case-by-case basis to determine both the legal requirements and the potential risks associated with such programs. This is an evolving area, and many issues still sit somewhere within a spectrum of different shades of gray. The laws and regulations governing this area of business can be complex and even conflicting at times. They can range from Federal Trade Commission laws (COPPA – Children’s Online Privacy Protection Act) and various state laws, to self-regulatory principles and best practices, like those promulgated by the Direct Marketing Association, the Children’s Advertising Unit of the Better Business Bureau, and the Mobile Marketing Association. While government regulators and self-regulatory agencies alike understand that no sweepstakes, contest or program is child-proof, they do expect advertisers to do their part to protect the safety of our kids. Along with a whole host of information on-line, sound legal advice in this area is key. Get it and follow it.
- Empower kids by giving them a voice, create a campaign that lets kids voice their opinion – In order to engage kids, create an interactive environment, such as a mobile game, a poll where they can vote for something, or interactive SMS or IVR that enables kids to participate and play. Kids learn through play, and brands will be most remembered when kids have had the opportunity to interact with the brand.
Mobile marketing doesn't have to turn kids into mindless consumers. Instead, it can open up a world of educational and developmental potential that parents can embrace rather than resist. Managing time and texting costs is a great way to teach kids how to budget their resources. Using advertised toys as an incentive for performance is an effective motivational tool. And mobile coupons that encourage kids to read books or participate in physical exercise is an idea that any parent would love.
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Ping Mobile is a full-service mobile marketing and technology company providing a complete range of mobile marketing services, including SMS, MMS, IVR, WAP applications and Bluetooth. With an industry-leading focus on consultancy, reporting, data analysis and client services packages, Ping Mobile is the mobile marketing agency of choice for clients that have included Warner Brothers, Ford Motor Company, Days Inn, Disney's Soap Channel, Kentucky Fried Chicken, Arby's, Pizza Hut and Hawaiian Airlines.
Ping Mobile is headquartered in Englewood Cliffs, NJ with offices in Los Angeles, CA, Atlanta and Tel Aviv, Israel. For more information please visit www.PingMobile.com
The Show Must Go On - But First Get Consent
…another important development in the area of mobile marketing and advertising.
Last week, the U.S. District Court for the Northern District of Illinois’ Eastern Division found that a 20th Century Fox SMS campaign violated the Telephone Consumer Protection Act (the “TCPA”). While these cases provide extremely important guidance as mobile marketing continues to evolve into legitimate and effective marketing medium, equally noteworthy is the fact that the SMS campaign in question took place five years ago.
On Oct. 1, 2005, 20th Century Fox sent text messages to various consumers advertising the release of its “Robots” movie on DVD. Victor Lozano was one of many individuals who received these text messages without having signed up for, or otherwise consented to, receiving them. Over the next several months, Mr. Lozano asserted that he received additional unsolicited text message advertisements from 20th Century Fox concerning “Robots” and other properties that were being marketed. As a result, he filed a lawsuit alleging that that text-message campaign was unlawful.
As we’ve written here in the past, the TCPA generally prohibits the use of an automatic telephone dialing system (“ATDS”) to place calls to a mobile number without the prior express consent of the recipient. Moreover, this court, like others before it, found that it is not necessary to prove that the sender actually used the equipment’s ATDS capacity, only that the equipment had that capacity. Although section 227 of the TCPA places certain restrictions on the making of an unsolicited “call,” the FCC has taken the position that sending SMS is the equivalent of making a call, at least when it comes to marketing communications.
Despite 20th Century Fox’s argument to the contrary, the court found the FCC’s interpretation to be reasonable and held that the 20th Century Fox text-message campaign was subject to the TCPA. Additionally, the court rejected the defendant’s notion that the TCPA only prohibits calls that result in a charge to the recipient.
Along with the case presented above, a class action lawsuit was filed very recently in Chicago against Selling Source, a web development, hosting and Internet marketing company, for sending “unsolicited” SMS messages via an ATDS, which the plaintiffs claim is a direct violation of TCPA laws. The defendant in the case filed a motion to have the case dismissed pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, which states that lawsuits with insufficient legal theories underlying their cause of action is grounds for dismissal in court. Despite Selling Source’s defense as to why SMS marketing messages should not fall under the terms of the TCPA, the FCC had already ruled that SMS was in fact covered under TCPA laws and were considered “calls” just like phone solicitations, and, as such, are subject to the same regulations set forth by the TCPA.
Why This Is Important: Consent is absolutely essential for SMS marketing and, as the recent string of cases in this area strongly support, an argument that text messages aren't subject to the TCPA is likely to fail. In addition, marketers should be cognizant that they are being regulated by yet another governing body (the FCC), thereby adding to the complication and worry on behalf of marketers who must apply, and make sure they adhere, to strict opt-in and deliverability standards, while being subject to lawsuits such as the one described above, where clear-cut laws under the TCPA are still not fully in place.
Are self-regulatory ad guidelines sufficient to satisfy federal regulators?
Reprinted with permission from Mobile Marketer at http://www.mobilemarketer.com.
Earlier last month the leading media, advertising and marketing trade associations, including the American Association of Advertising Agencies, Association of National Advertisers, Interactive Advertising Bureau, Direct Marketing Association and the Better Business Bureau, representing an overwhelming majority of industry participants, released their Self-Regulatory Principles for Online Behavioral Advertising (the “principles”), with the objective of protecting consumer privacy in ad-supported interactive media.
These generally follow the advisory principles that were released in February 2009 by the Federal Trade Commission. In fact, upon the FTC’s release, then-commissioner Jon Leibowitz remarked that anything industry can do to adopt, promulgate and enforce the principles represents “the last clear chance to show that self-regulation can – and will – effectively protect consumers’ privacy in a dynamic online marketplace.”
The principles were aimed at the following categories: education, transparency, consumer control, data security, material changes, sensitive data and accountability. Each principle is well thought out and tailored to specific areas within the universe of online behavioral advertising.
These principles can be summarized, in part, as follows:
- Educate consumers and businesses about online behavior advertising.
- Disclose and inform consumers about data collection and use practices, including various forms of notice that may be required depending on the nature of the data collected and the party collecting it.
- Give consumers options regarding the collection, use and sharing of information to non-affiliates.
- Require service providers and carrier networks – for example, non-first or third parties – to obtain consent before a user’s data may be used for behavioral advertising.
Thereafter, the data may only be obtained for as long as necessary to fulfill a legitimate business need, or as required by law.
- Special treatment afforded to sensitive information, such as medical and financial information, as well as information from users under the age of 13.
Moreover, service providers engaged in online behavioral advertising should undertake steps to help preserve the de-identified status of data collected and used if and when that data is shared with non-affiliates.
- Entities should maintain appropriate physical, electronic and administrative safeguards to protect the data collected and used for online behavioral advertising purposes.
- A user’s consent must be obtained before either a Web site or some other third party uses the previously collected data for materially different behavioral advertising purposes. Typically, a material change would be a more expansive collection or use of data than previously disclosed to the user.
- Establish accountability processes that should consist of monitoring programs, complaint procedures, reporting and compliance requirements, enforcement and public disclosures of offenders.
Does any of this sound familiar?
As early as 2007, many leading agencies, aggregators and publishers throughout the mobile marketing industry have stood behind most of these same principles and incorporated them into various codes of conduct and best practices.
Less talk, more teeth
Albeit in a somewhat different medium, the commonalities between data collected via the Web and that which is collected by mobile marketers are substantial.
Appreciating the sensitivity of a person’s confidential and/or personally identifiable information and the harm that can result from misuse, the mobile marketing industry instituted similar policies, including:
- Notice: Mobile marketers are required to inform consumers of the marketer’s identity and products/services offered, as well as the key terms and conditions that will govern the interaction between a marketer and the user.
- Consent: Mobile marketers must ask for and obtain explicit opt-in consent by a user for each mobile marketing program. Consent may not be carried into other marketing programs unless the user has consented to such communications.
- Constraint: Mobile marketers must limit and target the mobile messages to that which the user requested.
- Security: Mobile marketers must implement reasonable technical, administrative and physical procedures to protect the user information that is collected in connection with mobile marketing programs.
The one area in which the principles clearly extend beyond the codes of conduct and best practice documents born out of mobile marketing is in the area of enforcement and accountability.
For example, the Mobile Marketing Association has seemingly acknowledged its limited enforcement capabilities by stating in its Code of Conduct that “… until the Code can be enforced effectively by a third-party enforcement organization, mobile marketers are expected to use evaluations of their practices to certify compliance with the Code.”
In contrast, the Web principles expressly state in one place that “… any actions taken with respect to instances of non-compliance with be publicly reported by the programs” and in another, “When an entity engaged in [O]nline [B]ehavior [A]dvertising is informed by a program regarding its non-compliance with the Principles … The programs will send the public reports of uncorrected violations to the appropriate government agencies.”
Moreover, the Council of Better Business Bureaus, along with the Direct Marketing Association, has agreed to implement accountability programs to promote widespread adoption of the Web principles.
The one question that many industry experts are still asking themselves is whether the self-regulatory principles instituted by both Web and mobile industry players is sufficient to keep the federal government on the sidelines.
There still appears to be strong indications to suggest that Congress will be taking its turn by enacting general consumer privacy legislation, which may provide some absolute protections, and give both the FTC and Federal Communications Commission greater authority to regulate in this area.
Interestingly, Chairman Boucher of the FCC keyed in on this theme when he was asked during some recent hearings in Washington how statutory and regulatory regimes could exist on top of a self-regulatory one and how would consumers know where to turn in such a maze?
While the similarities between the Web principles and the mobile industry’s primary code of conduct are striking though not all that surprising, the uniform message that is being conveyed by all concerned participants in the digital advertising industry is clear – a new day has arrived in which transparency, education and reasonable choice for consumers must be part of the online advertising industry’s best practices.
The successful marketers going forward will be those that understand and appreciate this message, and build cultures which foster – rather than circumvent – respect for the consumer while continuing to market, advertise and promote the goods and services which are so intertwined in our daily lives.
Reprinted with permission from Mobile Marketer at http://www.mobilemarketer.com.
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.
