Consumer Advocacy Groups Request Federal Trade Commission Action To Stop Perceived "Threat" From Mobile Marketing

Posted on January 20, 2009 by Proskauer Rose LLP

In a year when behavioral advertising was already expected to be at the top of the hot button privacy issues list, on January 13, 2008, the Center for Digital Democracy (“CDT”) and U.S. Public Interest Research Group (“US PIRG”) filed a document with the Federal Trade Commission (“FTC”) urging the FTC to investigate online mobile marketing practices, to take new actions to stop mobile marketing activities that “abuse consumer rights,” and to recommend new federal legislation and enhanced enforcement power for the FTC in this area. The document expands on the groups’ concerns about online behavioral advertising generally – the delivery of ads tailored to consumers’ interests based on browsing habits and/or consumer demographics – to the mobile space. In doing so the groups cite the potential for even greater consumer harm because of the additional possibility of location-based targeting linked to a cell phone or other mobile device that is typically tied to a single consumer who uses it for multiple applications, including voice, video and data.      

In urging FTC action, the groups’ lengthy 52-page submission focuses primarily on media reports and the marketing literature of a large number of mobile marketing companies that tout the behavioral marketing capabilities of mobile technology.  The document also acknowledges the widespread consumer benefits mobile behavioral advertising offers, including making “rich media, free offers, personalization capabilities, and discounts” more broadly available. Despite its extensive cataloguing of the vast potential for effective targeted mobile marketing, the document is short on specifics as to how these practices currently harm or are likely to harm consumer privacy or constitute unfair or deceptive trade practices under Section 5 of the FTC Act. The group includes very limited specific allegations – against only Bango Analytics, Marchex and AdMob – that relate primarily to insufficient consumer notice.              

 The advocacy groups’ filing follows the FTC’s late 2007 release of draft self-regulatory principles for online behavioral advertising discussed previously at this blog here. At that time, the FTC recognized the benefit to consumers of receiving advertising more tailored to consumers’ interests and the role advertising dollars play in supporting new, innovative and free content. During 2008, the FTC accepted comments on its draft principles and is expected to issue final guidelines in the coming months. Also during 2008, state legislatures and Congress also became involved in the behavioral advertising debate as covered in this blog here and here. Meanwhile, also on January 13, 2009, the American Association of Advertising Agencies, Association of National Advertisers, Direct Marketing Association and Interactive Advertising Bureau jointly announced plans to develop enhanced self-regulatory industry guidelines for online behavioral advertising.

 

The CDT and U.S. PIRG filing will undoubtedly stir further debate as to whether the current regime consisting of (a) the forthcoming FTC self-regulatory online behavioral marketing principles, (b) case by case enforcement of unfair or deceptive trade practices under existing FTC authority, and (c) industry self-regulatory standards such as those adopted by the CTIA, and Mobile Marketing Association and expected from other industry groups, is sufficient to protect consumers in the vibrant, competitive marketplace of mobile communications where transparency and choice can be a selling point. We will continue to update our readers on these issues as the year unfolds.
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Emerging Standards For Mobile Marketing

Posted on June 10, 2008 by Kristen J. Mathews
Many B2C companies are beginning to explore marketing to consumers’ wireless devices using text messaging (“SMS,” or “short message service”) and MMS messaging (“Multi-media Messaging Service”). They may even target their promotions based on where the recipient is physically located using the wireless device’s GPS technology. They also may target their promotions to teens and tweens. What legal issues should companies be aware of as they navigate through this relatively new area?
This question is very timely, as mobile marketing has received a lot of attention from regulators and industry organizations in the last few months.

Statutes. Statutorily, we have two federal laws that apply to mobile messaging: the Telephone Consumer Protection Act (the “TCPA”) and the Controlling the Assault of Non-Solicited Pornography and Marketing Act (the “CAN-SPAM Act”). Each of these laws apply to mobile promotional messaging, depending on the technology used to send the messages. We also have a host of state laws that apply, either expressly or implicitly, to mobile promotional messaging. In summary, the laws require that companies obtain express consent from individuals before sending promotional messages to their wireless devices. In some cases, specific consent language is required.

Mobile Marketing Association Guidelines. In addition to statutes, we also have various industry standards that apply to text messaging campaigns. The Mobile Marketing Association (MMA), for example, has a set of Consumer Best Practices Guidelines for mobile marketing, which is incorporated by reference into the carrier agreements under which short codes are issued by carriers to companies that want to launch text messaging campaigns. These best practices provide, among other things, requirements for consumer notices, consent and opt-out rights.
 
Wireless Association Standards for Location-based Marketing. The CTIA (The Wireless Association) recently issued a set of best practices that provide for, among other things, consumer notice and consent for location-based marketing, and consumer choice for sharing of location information with third parties. These guidelines also address retention and security of location-based information, abuse reporting and public self-certification of compliance with the best practices. (Self-certification, in itself, presents its own set of legal issues.)
 
Federal Trade Commission. Just this past May, the Federal Trade Commission (FTC) hosted a public town hall meeting, “Beyond Voice: Mapping the Mobile Marketplace.” Topics discussed included the evolution and future of mobile marketing, location-based marketing, consumer disclosures and consents, the challenges of small PDA screens for consumer notifications, teen and tween-targeted campaigns, parental controls and security issues with respect to data stored on mobile devices. Also in May, two consumer advocacy groups (the Center for Digital Democracy and the U.S. Public Interest Research Group) announced their plan to file a complaint with the FTC, asking it to examine behavioral advertising via mobile devices and to promulgate special rules regulating mobile marketing to children and teens.
 
It is reasonable to anticipate that the FTC will ultimately issue either guidelines or rules which apply to mobile marketing campaigns, in an attempt to set forth uniform requirements for mobile marketing. Until then, companies must navigate and synthesize the various sources of applicable laws and standards, and derive an approach that meets their business objective while avoiding backlash from the media, the industry, the wireless carriers and consumers.
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