Mobile Marketing Complicates Legal Compliance

Vol. 9 Special Edition

William B. Baker is of counsel at Wiley Rein LLP in Washington, DC, where he advises clients on privacy, consumer marketing, communications, and e-commerce law. He also serves as Budget Officer for the ABA Section of Science & Technology Law. He can be reached at wbaker@wileyrein.com.

The contemporary mobile world—a wonderworld of mobile apps, storage in the cloud, texting, and precise geolocation—is transforming daily lives. And with so much of an individual’s life tied to one’s smartphone, it’s little wonder that advertisers desire a presence on the device as well.

Mobile marketing is on the rise. Estimates of the size of the mobile advertising market in the United States vary immensely, ranging from $2 million to more than $4 billion for 2012. Despite these wildly varying estimates, the trend is plainly upward.

Advertising benefits the new mobile world by providing vital financial support for free or low-priced mobile applications and mobile-optimized websites. The challenge for marketers is how to provide well-designed, useful, and accepted advertising (instead of tacky banner ads or pop-ups) within the confines of the small screen and, importantly, within legal parameters.

Although the United States has no general law of privacy, mobile marketing is subject to laws regulating advertising generally. More particularly, mobile marketing is subject to a variety of federal and state laws enacted over the past 30 years, each addressing a particular problem and often applying to the specific communications technology used. These restrictions mostly predate the mobile world, or even the Internet as we know it today, and certainly were not written with smartphones in mind. Nonetheless, these laws apply to mobile devices and are highly relevant to mobile marketing campaigns.

Getting a marketing message lawfully to a mobile device in the United States can be surprisingly tricky. What US law applies depends on factors such as the type of communications technology used, the age of the recipient, and even the process by which a particular recipient was selected to receive a particular ad. The applicable law will also define what the advertiser should or must do to comply.

Text Messaging

Consider the quintessential mobile marketing technology: text messaging. Two federal laws restrict marketing via text messaging: the Telephone Consumer Protection Act of 1991 (TCPA) and the national Do Not Call Implementation Act.

The TCPA prohibits the use of automatic dialing machines to make any calls to a telephone number assigned to a mobile device without “prior express consent” of the called party. The Federal Communications Commission (FCC) and several courts have ruled that a “text message” is a “call.” 18 FCC Rcd. 14014, 14115 ¶ 265 (2003); Satterfield v. Simon & Schuster, Inc., 569 F.3d 946 (9th Cir. 2009). Under this prohibition, the contents of the message (whether “marketing” or not) are irrelevant.

This prohibition applies widely because the FCC and courts have defined “automatic telephone dialing system” broadly.

In 2012, the FCC ruled that the prior express consent to receive text marketing messages must be in writing. 27 FCC Rcd. 1830, 1838 ¶ 21 (2012). That decision, which takes effect on October 16, 2013, eliminated the option of obtaining the express consent orally.

And do not overlook state laws. California, Rhode Island, and Washington are examples of states that have enacted laws flatly prohibiting the sending of commercial text messages to mobile phone numbers assigned to state residents. Other states—such as Utah and Michigan—restrict using text or instant messaging to market particular products (such as alcohol or pornography) to children under the age of 18. In each state, individuals may register email addresses, wireless contact information, or instant message identifiers to which minors may have access.

Separately, mobile devices can be listed in the Do Not Call Registry, and the restriction against telemarketing calls to wireless numbers on the registry applies just as it applies to residential landline numbers. Under the Federal Trade Commission’s (FTC) Telemarketing Sales Rule and the FCC’s Do Not Call rules, a marketing text message may be sent to a wireless number on the registry only where the recipient has given prior written consent (including signature and the phone number) to be contacted. Whether a message is “telemarketing” depends on whether there is a direct or implied sales offer. For example, the Ninth Circuit recently held that a text message that warned of the expiration of rewards points, and that provided a means to preserve them, was a telemarketing message due to its connection to the sale and use of rewards points. Chesbro v. Best Buy Stores Inc. (9th Cir. Oct. 17, 2012).

In sum, both the TCPA and the Do Not Call telemarketing rules require prior consent to receive text marketing messages, and as of fall of 2013 that consent must be in writing. Furthermore, when an advertiser obtains a marketing list with mobile marketing in mind, the advertiser must consider whether any particular consents from the intended recipients are necessary before launching the campaign.

Voice or Recorded Telemarketing Calls

Voice or recorded telemarketing calls to a mobile device are subject to the same laws as text marketing. In addition, the TCPA prohibits artificial or prerecorded voice messages to mobile devices without the prior express consent of the recipient.

Email Marketing

The law governing marketing to cell phones by email is more nuanced. An email to a general corporate or web-based account is subject to the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing) Act. The CAN-SPAM Act regulates “commercial” email messages—those for which the “primary purpose” is the commercial advertising or promotion of a commercial product—in a number of ways. Most notably, senders must include an opt-out mechanism in the commercial email messages and honor a recipient’s opt-out request.

The CAN-SPAM Act also specifically restricts email marketing messages addressed to a mobile email account (e.g., a domain such as att.net). These are “mobile service commercial messages” (MSCMs). The FCC flatly prohibits the sending of MSCMs to addresses at mobile email domains unless the individual recipient has given “express prior authorization” to the sender. 47 C.F.R. § 64.3100.

Marketing Via an App or to a Mobile Browser

Advertisers increasingly are looking to display ads in mobile browsers or mobile apps. They must consider not only technology-specific laws such as the TCPA or the CAN-SPAM Act, but also laws that apply to any marketing efforts, such as state sweepstakes laws and the prohibitions against misleading ads. For example, if a mobile ad is targeted to a child under the age of 13, the advertiser must comply with regulations recently adopted by the FTC that bring targeted advertising under the scope of the Children’s Online Privacy Protection Act (COPPA).

As the new COPPA rule illustrates, the FTC increasingly is paying attention to mobile marketing. It has recommended best practices for mobile app privacy and recently updated its guidance on “Dot.com Disclosures” to address the physical constraints of providing disclosures on the small screens of smartphones. The FTC is not alone: trade organizations have developed recommended codes of conduct, while state attorneys general, led by California, have weighed in as well. Mobile application developers themselves may soon be invited to pledge to adhere to “transparency” standards being drafted by a multistakeholder process under the auspices of the National Telecommunications and Information Administration.

This multifaceted legal environment poses challenges for mobile marketers, who must keep in mind, and comply with, a growing list of requirements when planning a mobile advertising campaign.

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