GSMI Mobile Marketing Strategies Summit: Sandwiched by FTC Enforcement and Class Action Litigation

Last week, I spoke at the GSMI Mobile Marketing Strategies Summit in San Francisco on running mobile promotions. The Summit’s timing was impeccable. Before the Summit, the FTC announced enforcement actions under the TCPA and the Telemarketing Sales Rule. Immediately after the Summit, class action lawyers filed complaints based on mobile marketers’ practice of confirming consumers’ desire to opt-out. With flip cameras going by the wayside and smartphones increasing in market share, mobile devices are increasingly important in our lives. As brands step into this nascent space, it is crucial to understand the legal issues that permeate mobile marketing.

In late February, the FTC filed a text message spam case alleging violations of the CAN-SPAM Act. Only a few days before the Summit, the FTC slammed Rascal Scooters with a $100,000 fine to settle charges that it had illegally used phone numbers from sweepstakes entry forms to contact consumers who were on the Do Not Call Registry. http://go.usa.gov/TJ3 The case reminds mobile marketers that a sweepstakes entry does not create an existing business relationship for purposes of the FTC’s Telemarketing Sales Rule. Just because a consumer gives a marketer his mobile number does not mean he has opted-in to specific campaigns.

The day after the Summit, class action lawsuits were filed in California against Twitter, Facebook and MySpace, complaining that text messages confirming that a user wanted to opt out violated the TCPA. http://bit.ly/mFo4NG The class action plaintiffs assert once they texted “STOP” to the short code, no confirmation should happen on their mobile devices. Many commentators have called these class action suits frivolous, saying that it is common practice for SMS providers to confirm the opt-out. It will be up to California courts to opine as to whether marketers can reasonably send one more text message to consumers or whether confirmation needs to be sought through other means, for example e-mail.

In the area of privacy, brand representatives from Charlotte Russe spoke at the Summit and mentioned that they only ask for first name and mobile numbers in mobile sweepstakes. Not only does this facilitate sweepstakes entry for the consumer, it means there is less sensitive date to protect. Charlotte Russe is wisely only asking for data it needs. At the same time, various speakers discussed the need for action by the mobile industry to create ways to opt out of tracking.

Another area of confusion at the GSMI Summit was the role of legal counsel on mobile promotions. Some marketers complained that their General Counsel did not understand the legal issues or just said no to marketing offers. If legal counsel does not understand your mobile marketing strategies, then it is time to turn to outside legal counsel who has expertise in this area. Bring legal counsel into the process early so there is time to examine the intricacies of your promotion’s execution. Your attorney should protect your interests but not stymie your marketing goals.

BEST PRACTICES:
1. Construe opt-ins narrowly for specific campaigns.
2. Consider other ways to confirm opt-out besides another text message.
3. Beef up privacy policies and confirm security procedures.
4. Engage specialty legal counsel on your mobile team early in the process.