Mobile Marketing Campaigns – Legalities and Realities

There has never been a better time for businesses that engage in digital marketing to invest in the mobile marketing space.  For those that wish that they implemented “opt-in” databases and SMS text message marketing campaigns last year, it is not too late.  In fact, the percentage of Americans who own smartphones is steadily increasing and now is the time to develop a business strategy that includes mobile marketing campaigns.

Mobile marketing is evolving at a staggering rate.  From a legal perspective, the “opt-in” nature of mobile marketing translates into the knowledge that consumers have already consented to receiving certain commercial marketing communications.  For those businesses that wish to implement mobile marketing campaigns, an experienced mobile marketing lawyer should be consulted to explain how best to comply with the Federal Trade Commission, the Federal Communications Commission, and Mobile Marketing Association (“MMA”) guidelines. 

The MMA offers best-practice guidelines for mobile content services.  As a general rule, when promoting programs via mobile phones, content providers should ensure all material clearly indicates whether the service is a “subscription.”  The program’s terms and conditions, the pricing information, additional fees, the subscription term and billing interval also must be clearly and conspicuously disclosed.   

In August 2004, the FCC voted to amend the CAN-SPAM Act of 2003 to outlaw all commercial e-mail messages to mobile phones and pagers, unless the device owner has given express prior authorization. The ban does not cover “transactional or relationship” messages, or notices to facilitate a transaction already entered into with a customer.  All authorized transactional or relationship messages must still comply with CAN-SPAM requirements. Consumers must be allowed to “opt-out” of receiving future messages the same way they “opted-in” and senders have 10 days to honor opt-out requests.  For programs charging a subscriber a standard rate for text messaging, only a single “opt-in” is required.  This single “opt-in” only applies to the specific program to which a customer subscribed and may not be construed as approval to market other products or services to the customer.  However, for “premium rate” programs, a double “opt-in” verification and consent is required.  Where the premium service is a subscription service, the double “opt-in” must include identification of the service as a subscription and the billing interval.  In addition, prior to renewal of the service (or at least once a month) a renewal message must be sent to the subscriber.  

Mobile marketing SMS and premium SMS sweepstakes promotions are also gaining in popularity.  There are three elements to an illegal lottery: (1) consideration or entry fee, (2) prize, and (3) chance.  In order to operate a valid sweepstakes in the United States, it is necessary to eliminate one of these elements.  Generally, operators eliminate the consideration element.  Where entry into a mobile sweepstakes is via premium SMS, you must allow for a free alternative method of entry.  There are numerous legal issues that surround what a “free” method of entry truly is.  Typically, this is accomplished by either providing a toll-free number for entry or by allowing free entry via a Web site.  Individuals entering the sweepstakes via the designated “free” method must be given the same opportunities to win as those individuals who enter via premium SMS.  In addition, marketers must provide the complete official contest rules prior to the potential entrant’s submission of an entry.  Contest rules should be reviewed by an experienced online promotions attorney because once a sweepstakes is commenced, the rules for that contest may not be modified until the conclusion of the contest period.  Regardless of the method of entry, states such as Florida, New York and Rhode Island require bonding or registration of the sweepstakes in the event that the aggregate prize value exceeds a particular threshold.  

Experienced legal counsel can assist your progressive mobile marketing campaign(s) to comply with evolving local, state, and federal laws and regulations pertaining to legal disclosures, privacy, and data collection.  The unprecedented financial benefits of implementing a mobile marketing campaign necessarily come with risks.  Hinch Newman LLP is committed to ensuring the  growth and vitality of your advertising and promotional endeavors.  The firm will assist you to successfully navigate the legal landmines that could otherwise lead to government and regulatory investigations, or costly litigation.