• FTC Warns Mobile Marketers
  • June 14, 2008
  • Law Firm: Reed Smith LLP - Office
  • Now is the time for the mobile marketing industry to demonstrate it can live by its own consumer protection standards—because the Federal Trade Commission is prepared to step in if necessary, a top official warned.

    “We strongly believe in self-regulation, but we are also going to police the wireless space,” stated FTC Commissioner Jon Leibowitz at a recent Town Hall meeting sponsored by the Commission titled, “Beyond Voice: Mapping the Mobile Marketplace.”

    In his introductory speech, Commissioner Leibowitz listed several primary concerns currently on the Commission’s radar. Top on that list was the disclosure of charges for short-code services, such as when consumers are invited to text message codes to vote in TV contests, order ringtones and the like.

    Commissioner Leibowitz acknowledged that it can be hard to “explain key terms and conditions on a screen the size of a small Post-it.” However, he made the agency’s expectations clear. “A lot of companies are doing this right and clearly disclosing the deal—but at the FTC we also receive complaints about inadequate disclosures and unauthorized charges,” he said.

    “Simply put, consumers shouldn’t be short changed by short codes.”

    Text Spam

    The second concern flagged by Commissioner Leibowitz was mobile advertising. “Some folks don’t mind a few ads—especially if they get free services or a lower monthly bill in return,” he noted. “But recent surveys have found that most consumers are annoyed when ads appear on their mobile devices, especially when the ads interfere with use.”

    Commissioner Leibowitz took particular aim at text spam, which subjects consumers “to unwanted and sometimes offensive content,” he said. Some consumers are charged per text message, he said, adding: “It’s as if every time you got spam or a pop-up ad on your computer you had to pay for the privilege of receiving it. Text spam invades your time, your privacy, and your wallet.”

    The third concern aired by Commissioner Leibowitz is the development of location-based services, which employ Global Positioning System (GPS) technology to permit people’s locations to be tracked in real time.

    “[T]he sense that Big Brother—or ex-boyfriend—knows where you are at any given moment raises troubling issues about government access, physical safety, and personal privacy,” Commissioner Leibowitz said.

    He also referenced the growing ability to deliver geographically relevant ads as people travel.

    “While I can certainly see the merit of a text message with a coupon for 20 percent off your next double-soy, half-caf, no-whip frappuccino delivered as you walk into your local Starbucks, imagine walking down a city street or through a mall and being bombarded with ads and messages,” he said.

    “Do we really want our PDAs turning into digital pocket billboards? Personally, I worry about clutter.”

    Kids and Phones

    The final concern discussed by Commissioner Leibowitz is marketing aimed at children and teenagers.

    “Like the problems with online behavioral marketing that the Commission is now wrestling with, mobile tracking and targeting of kids is worrisome,” he said. “We need to consider whether additional protections for children are warranted.”

    Notwithstanding these concerns, Commissioner Leibowitz noted with approval strides made by the industry to regulate itself. He cited the Mobile Marketing Association’s Consumer Best Practices Guidelines for mobile advertising and services—which address marketing to youth under age 13. In addition, CTIA-The Wireless Association just unveiled its Best Practices and Guidelines for Location-Based Services, he noted.

    “The good news is that most industry efforts recognize that consumer notice, choice, and some form of ‘opt in’ for advertising and services is crucial in the mobile context,” he said.
    Current industry guidelines “are a good first step,” he said, “but they need to go further in ensuring that consumer notice is clear and conspicuous, and not buried in a website privacy policy—and that user consent is truly express.”

    Why This Matters:  Commissioner Leibowitz’s remarks provide useful insights into the mobile marketing issues that are top concerns at the FTC.