Mobile Marketing Regulatory Compliance Lurking Dangers and Cautionary Tales. Andrew Lorentz Ronnie London Ken Payson

Transcription

1 Mobile Marketing Regulatory Compliance Lurking Dangers and Cautionary Tales Andrew Lorentz Ronnie London Ken Payson

2 Overview Overview of regulatory regime Less-obvious compliance issues Potentially significant exposure from seemingly innocuous conduct 2

3 Mobile Communications Regulation Interacting with customers over mobile platforms is heavily regulated 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 3

4 Mobile Communications Regulation FCC Telemarketing, Automated Dialing System, and Mobile CAN-SPAM Rules 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) 4

5 Mobile Communications Regulation FCC Telemarketing, Automated Dialing System, and Mobile CAN-SPAM Rules Text-messages to phone numbers governed by TCPA Special FCC CAN-SPAM rules govern mobile service commercial messages (MSCMs) to wireless domain addresses (e.g., Applies only to primarily commercial s 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 ( 5

6 Mobile Communications Regulation FTC Telemarketing and Fair Trade Practice, and Other Regulation 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, -only in some contexts Applies whether PII collection is via website or mobile app 6

7 Mobile Communications Regulation FTC Telemarketing and Fair Trade Practice, and Other Regulation 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 7

8 Mobile Communications Regulation FTC Telemarketing and Fair Trade Practice, and Other Regulation 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 8

9 Industry guidelines Mobile Communications Regulation 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 ( 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 9

10 Mobile Carrier Rules Mobile Communications Regulation 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 10

11 Lurking Dangers Industry guidelines and legal requirements/prohibitions may not always align perfectly The problem of opt-out confirmations Mobile Communications Regulation 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 11

12 Overarching Practical Tips Mobile Communications Regulation 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 12

13 Overarching Practical Tips Mobile Communications Regulation 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 13

14 Contact Information Assumptions Litigation Lessons Many companies assume if a customer gives them a contact number, they can contact the customer at that number to: Welcome them Provide information Inquire about past-due accounts Woo them back as customers 14

15 Litigation Lessons 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 15

16 Litigation Lessons 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) $ million TCPA statutory damages exposure based on approx. 100k texts $19 million settlement fund 16

17 Litigation Lessons Exposure Lozano v. Twentieth Century Fox Film Corp. (N.D. Ill. 2010) $ 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 17

18 Litigation Lessons Exposure Sallie Mae Intuit $24 million TCPA settlement $10 million TCPA settlement J. P. Morgan $9 million TCPA settlement 18

19 Litigation Lessons 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 19

20 Litigation Lessons 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 20

21 Litigation Lessons Consent Providing phone number does not equal consent Thrasher-Lyon v. CCS Commercial, LLC, No. 11 C (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) 21

22 Litigation Lessons Consent 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) 22

23 Litigation Lessons 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) 23

24 Litigation Lessons 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 (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) 24

25 Litigation Lessons ATDS (Automatic Telephone Dialing System) Bare allegations of ATDS use generally insufficient to state TCPA claim See Ibey v. Taco Bell Corp., 2012 WL (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) 25

26 Litigation Lessons 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 (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 (N.D. Ill. Dec. 14, 2009) (same) 26

27 Litigation Lessons 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) 27

28 Litigation Lessons Confirming STOP Text Rayabyshchuk v. Citibank, 2011 WL (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 (S.D. Cal. June 18, 2012) (single text confirming opt out request did not state TCPA violation) 28

29 Litigation Lessons 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 29

30 Questions? Andrew Lorentz, Partner Ken Payson, Partner Ronnie London, Of Counsel

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