Mobile Marketing Regulatory Compliance Lurking Dangers · PDF fileFTC Telemarketing and Fair Trade Practice, ... •NTIA holding multistakeholder meetings to create industry code

Mobile Marketing Regulatory Compliance

Lurking Dangers and Cautionary Tales

Andrew Lorentz Ronnie London

Ken Payson

Overview

Overview of regulatory regime

Less-obvious compliance issues

Potentially significant exposure from seemingly innocuous conduct

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Interacting with customers over mobile platforms is heavily regulated

Mobile Communications Regulation

FCC Telemarketing, Automated Dialing System, and Mobile CAN-SPAM Rules

FTC Telemarketing and Fair Trade Practice Regulation

State analogs to FCC & FTC Authority

Industry guidelines – MMA, CTIA, IAB

Wireless carrier rules

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Telephone Consumer Protection Act (TCPA) and FCC rules bar automated wireless calls – of any content, i.e., sales & non-sales – absent prior express consent • Includes text-messaging, prerecorded/artificial voice calls, and

auto/predictive-dialed live agent calls • For sales calls, clear and conspicuous prior written, signed consent is

required • But even for non-sales, must record prior express consent

Courts strictly construe consent required

Private causes of action + FCC fines (up to $16K/call)


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Text-messages to phone numbers governed by TCPA

Special FCC CAN-SPAM rules govern “mobile service commercial messages” (MSCMs) to wireless domain email addresses (e.g., [email protected]) •Applies only to “primarily commercial” emails like FTC CAN-

SPAM, but opt-in, not opt-out •Must offer/honor opt-out even after opt-in •FCC database of wireless domains must be scrubbed against

(www.fcc.gov/cgb/policy/DomainNameDownload.html)


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mailto:[email protected]

http://www.fcc.gov/cgb/policy/DomainNameDownload.html

Telemarketing Sales Rule (TSR) mirrors TCPA rules, (but is not explicit as to texting or auto/predictive-dialing cells)

Children’s Online Privacy Protection Act (COPPA)

• Requires verifiable parental consent prior to knowingly collecting, using or disclosing PII of children under 13

• Exceptions for contests, one-time contact, email-only in some contexts

• Applies whether PII collection is via website or mobile app

FTC Telemarketing and Fair Trade Practice, and Other Regulation


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Expects privacy policies to govern collection and use of personal data, and enforces failure to honor promises made in them • Preaches “privacy by design” • Offer simplified notice, choice, and consent, plus

transparency, data security and timely deletion • Report Privacy called for mobile services to work

toward short, meaningful disclosures


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Obama Administration Consumer Privacy Bill of Rights • Individual control, transparency, respect for context, security,

access and accuracy, focused collection, and accountability •NTIA holding multistakeholder meetings to create industry code

of conduct for transparency in mobile apps and other interactive mobile services

FCC has also waded in – seeks comment on privacy and security of information stored on mobile devices


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Industry guidelines


Mobile Marketing Association (MMA) •Global Code of Conduct calls for Notice, Choice & Consent, Customization & Constraint, Security & Accountability

•Mobile Application Privacy Policy Framework provides model/starting-point for mobile app privacy policies (http://mmaglobal.com/whitepaper?filename=MMA_Mobile_Application_Privacy_Policy_15Dec2011PC_Update_FINAL.pdf)

CTIA - The Wireless Association: •Best Practices for Location Based Services seeks to ensure users receive meaningful notice about, and consent to, how location information will be used, disclosed and protected

Interactive Advertising Bureau Self-Regulatory Principles for Online Behavioral Advertising contemplate Education, Transparency, Consumer Control, Data Security, Notice of Material Changes, Special Handling of Sensitive Data

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http://mmaglobal.com/whitepaper?filename=MMA_Mobile_Application_Privacy_Policy_15Dec2011PC_Update_FINAL.pdf

http://mmaglobal.com/whitepaper?filename=MMA_Mobile_Application_Privacy_Policy_15Dec2011PC_Update_FINAL.pdf

Mobile Carrier Rules


Each carrier has its own set of rules for what is permissible, for example, for each type of campaign over its network, including, for instance, texts

To conduct SMS campaigns, must typically go through an aggregator that allows operation across carriers, which in turn have generally applicable rules, and rules applicable to each carrier

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Lurking Dangers Industry guidelines and legal requirements/prohibitions may not always align perfectly

• The problem of opt-out confirmations

Agencies with overlapping authority regulate the same conduct, but in different ways

Vendor use does not ensure insulation from liability

State law

• FCC’s promises preemption, ignores requests to back it up • States rely on federal rules only when to their advantage, otherwise enforce

their own, differing rules • E.g., WA autodialing law • Amended NY registration law


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Overarching Practical Tips

Consider adding a CPO, or at least assigning some CPO-like responsibilities

Maintain (or create) a good working relationship between legal and marketing

Establish system of internal reporting and checks and balances to detect and solve problems early, before they snowball

Monitor third-party vendors, partners and affiliates


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Overarching Practical Tips

Track the way customer data is managed; ensure that those who opt-out get opted-out in the system

Make sure you know what data you will collect from consumers, and what uses you could possibly make of that data—and disclose that in your privacy policy

Make the disclosures easy to find and understandable

Beware of the “creeped out” factor; privacy concerns typically arise where the intrusion seems akin to dystopian science-fiction


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Contact Information Assumptions

• Welcome them • Provide

information • Inquire about

past-due accounts

• Woo them back as customers

Many companies assume if a

customer gives them a contact

number, they can contact the customer at that

number to:

Litigation Lessons

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Permissibility

Whether contact is permissible depends on:

• Type of call—sales, debt, other • Whether using live operator or prerecorded voice • Whether using autodialer • Type of phone line called—cell, residential, business

Even sophisticated companies that are aware of the TCPA and try to ensure compliance trip up

Litigation Lessons

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Exposure

With statutory damages of $500 to $1,500 per call, text, or fax, exposure quickly becomes staggering

Most cases have exposure in the 10s or 100s of millions of dollars

• CE Designs v. King Supply Co. (N.D. Ill. 2011) • $335 million TCPA statutory exposure (143k class

members) • $20 million judgment

• Rojas v. Career Educ. Corp. (N.D. Ill. 2012) • $50-100 million TCPA statutory damages exposure based

on approx. 100k texts • $19 million settlement fund

Litigation Lessons

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Exposure

Lozano v. Twentieth Century Fox Film Corp. (N.D. Ill. 2010) • $50-100 million TCPA statutory damages

exposure based on approx. 100k texts • $16 million settlement fund

Hinman v. M & M Rental Ctr., Inc., 596 F. Supp. 2d 1152 (N.D. Ill. 2009) • $3.9 million TCPA summary judgment

Litigation Lessons

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Exposure

Sallie Mae •$24 million TCPA settlement

Intuit •$10 million TCPA settlement

J. P. Morgan •$9 million TCPA settlement

Litigation Lessons

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Class Action Potential

Expect uptick in TCPA class actions because of better enforceability of consumer arbitration agreements after Concepcion

Text marketing to customer prospects with whom businesses have no existing relationship and therefore no arbitration agreement fertile ground for plaintiff class action lawyers

Litigation Lessons

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Consent

47 U.S.C. § 227(b)(1)(A) generally prohibits using an auto-dialer for telemarketing, except calls “made with the prior express consent of the called party”

Litigation Lessons

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Consent

Providing phone number does not equal consent •Thrasher-Lyon v. CCS Commercial, LLC, No. 11

C 04473 (N.D. Ill. Sept. 4, 2012) (plaintiff’s provision of cell number as her sole contact source did not constitute express consent to be contacted by automated dialer)

• In re Jiffy Lube Int’l, Inc., Text Spam Litig., 847 F. Supp. 2d 1253 (S.D. Cal. 2012) (plaintiffs providing cell numbers as contact numbers did not constitute express consent to receive automated texts)

Litigation Lessons

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Consent

Litigation Lessons

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Providing phone number does not equal consent •Satterfield v. Simon & Schuster, Inc., 569

F.3d 946, 955 (9th Cir. 2009) (plaintiff’s consent to receive promotional material from Nextone or its affiliates and brands was not consent to receive text message from defendant, which was not a Nextone affiliate or brand)

Vicarious Liability

Hiring third party to send texts does not by itself avoid liability

•In re Jiffy Lube Int’l, Inc., Text Spam Litig., 847 F. Supp. 2d 1253 (S.D. Cal. 2012)

•Kramer v. Autobytel, Inc., 759 F. Supp. 2d 1165, 1170 (N.D. Cal. 2010)

Litigation Lessons

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Vicarious Liability

Most courts assume the possibility of vicarious liability exists and employ common-law agency principles to resolve the issue

•Thomas v. Taco Bell Corp., -- F. Supp. 2d --, 2012 WL 3047351 (C.D. Cal. June 25, 2012) (dismissing TCPA text class action against Taco Bell based on texting by Taco Bell franchisees where Taco Bell did not direct or supervise texting activity)

Litigation Lessons

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ATDS (Automatic Telephone Dialing System)

Bare allegations of ATDS use generally insufficient to state TCPA claim • See Ibey v. Taco Bell Corp., 2012 WL 2401972 (S.D.

Cal. June 18, 2012) (refusing to credit unsupported allegation that “the Defendant used an ATDS”)

• See also Knutson v. Reply!, Inc., 2011 U.S. Dist. LEXIS 7887, at *5 (S.D. Cal. Jan. 26, 2011) (same)

• But see In re Jiffy Lube Int’l, Inc., Text Spam Litig., 847 F. Supp. 2d 1253 (S.D. Cal. 2012) (allegations texts were sent by machine with capacity to store or produce random telephone numbers sufficiently stated use of automated dialer in violation of TCPA)

Litigation Lessons

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ATDS (Automatic Telephone Dialing System) (cont.)

Generalized vs. personalized message • Connelly v. Hilton Grand Vacations Co., 2012 U.S.

Dist. LEXIS 81332, at *13 (S.D. Cal. June 11, 2012) (to survive motion to dismiss plaintiff must plead enough detail about text to “allow[] the court to infer that the calls [or texts] were randomly generated or impersonal”)

• Hickey v. Voxernet LLC, -- F. Supp. 2d, 2012 WL 3682978 (W.D. Wash. Aug. 13, 2012) (impersonal text gives rise to inference of automated dialer in violation of TCPA)

• Abbas v. Selling Source, LLC, 2009 WL 4884471 (N.D. Ill. Dec. 14, 2009) (same)

Litigation Lessons

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Arbitration

In re Jiffy Lube Int’l, Inc., Text Spam Litig., 847 F. Supp. 2d 1253 (S.D. Cal. 2012) (all disputes clause in arbitration agreement did not reach statutory tort claims such as TCPA)

Adams v. AT & T Mobility, LLC, 816 F. Supp. 2d 1077 (W.D. Wash. 2011) (all disputes clause in arbitration agreement did reach TCPA statutory tort claims; granting motion to compel arbitration of individual claims in TCPA text class action)

Litigation Lessons

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Confirming “STOP” Text

Rayabyshchuk v. Citibank, 2011 WL 5976239 (S.D. Cal. Nov. 28, 2011) (plaintiff did state claim for TCPA violation based on text confirming receipt of plaintiff’s text message requesting to opt-out of text message advertisements)

Ibey v. Taco Bell Corp., 2012 WL 2401972 (S.D. Cal. June 18, 2012) (single text confirming opt out request did not state TCPA violation)

Litigation Lessons

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Takeaways Obtain consents

Document consents

Ensure third-party consents encompass your company

Do not rely on mobile marketing vendors’ assurances of what is and is not compliant

Properly allocate compliance and indemnification rights/duties in vendor agreements

Personalize messages if possible

Do not retain transmission reports/data any longer than required

Include broad “all disputes” arbitration agreements where you can

Litigation Lessons

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Questions?

Andrew Lorentz, Partner • 202.973.4232 • [email protected]

Ken Payson, Partner • 206.757.8126 • [email protected]

Ronnie London, Of Counsel • 202.973.4235 • [email protected]

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DWT paymentlawadvisor The DWT Payments Team addresses changes and continuities in the payments industry every day—leveraging our many years of industry experience and our presence on both coasts and in China. On www.paymentlawadvisor.com, we offer commentary on new developments that seem particularly significant, as well as resources that we believe can be helpful to others who are tasked with anticipating, understanding and addressing these developments. Follow us on Twitter: @paymentLAWadv

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Disclaimer

This presentation is a publication of Davis Wright Tremaine LLP. Our purpose in making this presentation is to inform our clients and friends of recent legal developments. It is not intended, nor should it be used, as a substitute for specific legal advice as legal counsel may only be given in response to inquiries regarding particular situations.

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Documents

Mobile Marketing Regulatory Compliance Lurking Dangers · PDF fileFTC Telemarketing and Fair Trade Practice, ... •NTIA holding multistakeholder meetings to create industry code