Sponsor Content Above the Clutter with Pete Krainik
Episode Seven: Man And Machine
Brought to you by: IBM
In 2010, the number of wireless device subscriptions in the U.S. outnumbered the domestic population, and that ratio is expected to increase to almost 2-1 by 2021. Last October, TechCrunch reported that in the second quarter of 2015, consumers spent more time using apps on their mobile phones than watching TV. And that statistic doesn't even account for time spent using a mobile web browser. So, it stands to reason that if advertisers want to reach consumers, they need to meet them on their turf. But before engaging in a mobile-marketing campaign involving text messages promoting special sales and discount codes, advertisers need to understand the rules and risks involved in communicating with consumers on their devices.
No industry is immune from liability under a federal law that prohibits sending consumers unsolicited text ads. The Telephone Consumer Protection Act of 1991 prohibits calls and text messages transmitted to an individual's mobile device using an automatic telephone dialing system without the recipient's consent. Various courts have held that texting platforms are autodialers, as texts are sent using a consumer's mobile number. The law is enforced by the Federal Communications Commission and provides consumers with a private right of action that includes statutory damages of up to $1,500 per violation (i.e., each unsolicited text message).
Importantly, a plaintiff has no obligation to prove actual harm in seeking these damages. In a class action involving thousands or millions of unauthorized text messages, potential damages can reach staggering sums with one press of a button.
Countless companies in the consumer apparel, retail, banking and professional sports industries have in recent years been subject to these suits, with virtually all resulting in multimillion-dollar settlements, just to avoid the costs and uncertainty of litigation. Worse, it is not uncommon for smaller companies with limited financial resources to simply dissolve rather than incur significant costs in defending these suits.
So how can companies conduct a mobile-marketing campaign safely given these risks? Three words: consent, consent, consent.
Consent may be obtained in writing, online or through an interactive voice response system as long as the FCC-proscribed language is present, a consumer indicates her assent by taking an affirmative action to agree (e.g., submitting a paper form, pressing a "submit" button or verbally agreeing to the terms) and the agreement is capable of being recorded or maintained.
Obtaining consent via a call to action in an ad, at a kiosk or on television, where a consumer is instructed to text a word or code to a short code, is a bit trickier. The FCC disclosure language would need to be in the consumer agreement, which may be difficult, if not impossible to satisfy in an inbound text message initiated by the consumer. Some companies have addressed this issue by responding to a consumer's inbound text with a onetime confirmation message containing the required disclosures and instructions to reply "Y" or "Yes," which if followed, would presumably constitute the consumer's full agreement. To date, this approach has not been challenged in the courts or by the FCC, though given the TCPA's financial incentives for challenging violations, however minor, it remains to be seen whether the FCC or the courts would view this method as a viable way to obtain appropriate consent.
If there is no intention to send consumers multiple marketing messages, but instead to simply send a onetime code for an instant discount, the FCC has declared that the above consent requirements are not necessary and a consumer-initiated text in response to a point-of-sale call to action will suffice. But this exemption is only good for a onetime response and may not contain any content other than the specific purpose for which the request was made.
The TCPA is a dangerous and unforgiving statute fraught with pitfalls and traps for the unwary. Given the financial incentives for plaintiffs to seek out noncompliant campaigns for a quick payday, advertisers must ensure that their mobile campaigns strictly comply with the TCPA or else face costly litigation.
Marc Roth is a partner in the advertising, marketing and media division of Manatt, Phelps & Phillips.