LOEB & LOEB Adds Value©2011 LOEB & LOEB LLP

Marketing On The Go:Legal Issues in Mobile AdvertisingDouglas N. MastersNerissa Coyle McGinnFebruary 3, 2011

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The Next Big Thing is Here (and Everywhere)

4.1 Billion mobile users worldwide. – More mobile phone subscribers in the

world than landline phone subscribers.

There are 285 million wireless subscribers in the U.S.—91% of population

Mobile web will be bigger than desktop Internet use by 2015 due to current rate of change and adoption – Morgan Stanley

U.S. mobile application revenue is expected to reach $1.6b in 2010 and climb to $11b in 2014 according to the Yankee Group.

Gartner predicts that $7.5 billion will be spent annually on mobile advertising by 2012 and mobile applications will be the primary vehicle that drives a substantial portion of that market.

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What does Mobile Marketing include?

1. Marketing that includes interactivity and location based services2. Buying Ad Space On Websites That Are Configured For Access By Mobile Devices (Sometimes Called

WAP-Enabled Services).3. Advertising Tied To Content And Mobile Apps.

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Mobile Marketing – What Does It Include?Marketing That Includes Interactivity or LBS.Sending a promotional

message, alert, or account update to a user via text message. – Chicago Bulls Mobile Alerts.

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Mobile Marketing – What Does It Include?Marketing That Uses Interactivity or LBS.

Entering a contest or sweepstakes or casting a vote via a text message.

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Mobile Marketing – What Does It Include?Marketing That Uses Interactivity and LBS.Using global

positioning system (GPS) technology to send promotional messages to mobile devices that are relevant to the user’s location.

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Mobile Marketing – What Does It Include?Marketing That Includes Interactivity or Location Based Services.

Delivering coupons to a mobile device that can be read by a scanner and redeemed at a store.– Shopkick listed as Top 10

App of 2010 by Wall Street Journal One of the 10 Apps to watch in 2011 by Mashable.

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Mobile Marketing – What Does It Include? WAP Advertising.

Buying Ad Space On Websites That Are Configured For Access By Mobile Devices (Sometimes Called WAP-Enabled Services).

– AdMob bought by Google for $750 Million.

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Mobile Marketing – What Does It Include?Advertising Tied To Content And Mobile App.Creating a mobile app

that promotes a product or event.

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Mobile Marketing – What is it?Advertising Tied To Content And Mobile Apps.

Sponsoring a mobile app that appeals to a marketer’s demographics.

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Mobile Marketing – What is it?Advertising Tied To Content And Mobile Apps.

Product placement in games played.

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Mobile Marketing – What is it?Advertising Tied To Content And Mobile Apps.

Providing songs or other recordings for use as ring tones (which may be tied to a product or event, such as a recently released movie).

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Mobile Marketing – What is it?Advertising Tied To Content And Mobile Apps.

Buying ad space in third-party mobile apps that appear before, during or after use of the mobile app.

Advertising tied to streaming of live broadcasts.

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Mobile Marketing – The Regulatory Landscape

Federal and state telemarketing and email laws.

Federal and state advertising laws.

Mobile Marketing Association guidelines. – De facto laws because so far not many

laws directly regulate mobile marketing.

Child protection registries in Utah and Michigan.

State Attorneys General and civil litigants.

Wireless carriers have their own standards and rules.

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Which Laws Apply?

How a message is sent determines what law(s) apply. SMS (short message service a/k/a test message) sent to a

wireless telephone number = TCPA (Telephone Consumer Protection Act, a federal telemarketing law).

Voice call (live or recorded) to a wireless telephone number = TCPA.

Email sent to an email address that contains a wireless telephone number and a wireless carrier’s domain name = CAN-SPAM (federal commercial email law) + TCPA (maybe).– For example,

2124074000@wirelesscarrier.com

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Text Messaging

Opt –In Required. Single opt-in for standard text messages; double opt-in for premium text messages (MMA Guidelines) Opt-in must include:

–A clear communication of the financial obligation the consumer is about to incur by entering the program (MMA Guidelines);

–Disclosure of the name of the entity that will be sending the text messages and, if different, the name of the entity advertising the applicable products or services when obtaining the consumer’s consent. (TCPA); and

–Instructions on how to opt-out of the program (MMA Guidelines Scrub against the Do Not Call Registry every 30 days. (TCPA)

–If on the registry cannot call without an established business relationship.

No automatic dialer without prior express consent.–No Established Business Relationship exception

Opt-Out Mechanism Required (TCPA and MMA Guidelines) If a service, must be allowed to cancel at anytime. (MMA

Guidelines)

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Text Messaging

A subscriber can stop participating and receiving messages from any program by sending STOP to the shortcode used for that program. (MMA Guidelines)–END, CANCEL, UNSUBSCRIBE or QUIT should also be opt-out key words

for all programs; however, content providers should feature the word STOP in their advertising and messaging.

–The opt-out keyword STOP sent by the subscriber cannot be case sensitive.

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Text Messaging

Notice – Inform the user of the marketer’s identity or products and services and the key terms and conditions that govern an interaction between the marketer and the user’s mobile device.

Privacy–Customization & Constraint – user information collected for

marketing purposes should be used to tailor marketing to the interests of the mobile user; mobile marketers should target and limit mobile messages to that which users have requested.

–Security – mobile marketers must implement reasonable technical, administrative and physical procedures to protect user information from unauthorized use, disclosure or access.

State Child Protection Registries – If advertising pornography, alcohol, firearms, or tobacco products, scrub against the Utah and Michigan child protection registries.

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Text Messages

Fragmentation and varying platforms create challenges for advertisers.– Different handsets and different protocols used by the wireless

carriers mean ads are displayed differently on each device – might require advertisers to provide multiple versions of ads to the mobile aggregator.

Carrier Specific Rules. – No profanity or sexually explicit images or language.

– No defamatory material.

– Nothing that facilitates an illegal activity.

– No false or misleading advertising.

– Nothing that would infringe someone’s IP rights.

– No parody of wireless carrier’s products or services.

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E-Mail and CAN-SPAM

Applies very narrowly – only to email messages sent to an address that includes a wireless telephone number and a wireless carrier’s domain name.– FCC maintains a list of wireless carrier domain names; marketers should

scrub against the FCC list. Marketer must get prior express authorization from recipient to send a

message. CAN-SPAM disclosure and opt-out requirements apply.

– Identify message as an advertisement– Notice of right of opt-out and opt-out mechanism– Physical Address of sender.

TCPA might also apply to this type of message – an Arizona court held that such a message is a “call” and subject to TCPA.– Joffe v. Acacia Mortgage Corp. (Arizona Court of Appeals 2005) – court said this type

of message is a call because result is that an email is translated into an SMS message and is forwarded to a cell phone.

Privacy Issues State Child Protection Registries

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Location Based Services

Privacy laws apply.– The FTC Act which prohibits unfair and deceptive

practices.– The Gramm-Leach-Bliley Act which applies to financial

information.– HIPPA which applies to medical information.– State privacy laws such as California On-line Privacy

Protection Act.– COPPA.

Potential Do Not Track Proposal by FTC.– The FTC believes the existing choice mechanisms for

behavioral advertising have fallen short. Therefore, the FTC suggested having an opt-out option for behavioral advertising.

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Location Based Services

Tips for Location Based Services:

Follow Your Own Policy – Two class action lawsuits against Apple and Application Providers for

sharing UDID (Unique Device ID) with advertisers filed in December, 2010.

Give consumers notice.– Adequately and clearly disclose what data is collected and for what

purpose.

Reasonably safeguard data.– Technical.

– Administrative.

– Physical.

Give consumers notice and opportunity to opt-out of a changed policy.

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Push Notification Services

TCPA requirements for text messaging apply.

Mobile Marketing Association’s Guidelines.

Privacy laws.–Who owns the information? For instance, Apple’s push notification system involves Apple acting as intermediary. Who owns data? What are the obligations of intermediary?

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Mobile Marketing and Sweepstakes

Is text messaging consideration?–MMA Guidelines state that

Consideration may be monetary or non-monetary. Therefore, if there is a premium text message charge, must provide an alternative method of entry.

Disclosure of rules.–Should provide information in

initial message on how to find official sweepstakes rules. (MMA Guidelines)

Poorly written sweepstakes rules will result in delays in wireless carrier approval.

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Promotional Subscriptions

Clearly disclose the terms of the transaction and any fees that may be charged, including indirect fees such as text messaging charges levied by a wireless service provider.

Avoid using promotional terms such as “free,” “complimentary,” or “no charge” if consumers may be subjected to fees from their wireless service providers or any other parties.

Avoid using pre-checked boxes for accepting the terms or conditions of an offer. The consumer should be required to affirmatively opt-in to the subscription.

Include valid methods for the consumer to terminate a subscription or challenge a fee.

Special notices if automatically renewing.

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Mobile Coupons, Premiums and Promotional Offers

MMA and DMA need prior consent from consumer to send mobile coupons.

MMA and DMA require advertiser to notify consumers of the identity of the product/service and key terms and conditions of the offer.

Applicable laws for coupons. Potential LBS issues.

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Questions