This is a guest post by Ross Buntrock who heads the Communications, Technology and Mobile practice at Arent Fox LLP in Washington, DC and is nationally recognized for his work in mobile marketing, privacy and data protection and technology law. His clients include mobile marketing companies, telecommunications carriers, technology companies, content providers, mobile payment companies, app developers and trade associations
Given the scale on which mobile marketing campaigns can be conducted these days, it’s entirely possible for a mobile marketer to rack up over a million dollars’ worth of Telephone Consumer Protection Act (TCPA) or Telemarketing Sales Rule (TSR) violations before your first cup of coffee kicks in. This is especially true now that the Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) have ramped up enforcement efforts and the explosive growth in TCPA class-action lawsuits. Under the statutory damages available under the TCPA, a mobile marketing campaign of just 10,000 text messages could result in a judgment of $15,000,000, while both the FTC and FCC can issue maximum penalties of $16,000 per violation, i.e., per message. Further, the FTC’s view is that any company in the marketing chain is equally guilty if that company knows or could know that violations are occurring. Because there is no “unsend” button, there are few key considerations mobile marketers need to address to minimize the potential of large legal bills, judgments and government fines.
Ordinarily, a mobile marketer will not have a direct relationship with a message recipient, so it will be impossible to know beforehand whether the seller received the required consent to lawfully send a marketing message. As a result, mobile marketers need to ensure that the terms of service on their websites or contracts with specific sellers immunize the mobile marketer from TCPA or TSR liability specifically, and any unlawful use of their services generally. The most common mistakes on this front involve mobile marketers cutting and pasting terms of service they found on the Internet without regard to whether such terms accurately describe the marketing services they provide or the indemnification they seek. Mobile marketers should also never put themselves at the mercy of a joint defense with the seller if a consumer files suit. The seller may want to settle on the cheap and avoid mobile marketing in the future, but that’s not an option for the mobile marketer, especially when plaintiffs’ lawyers smell blood in the water. Instead, mobile marketers should insist that sellers comply with the TCPA and TSR, and if a consumer alleges that they did not, mobile marketers should have indemnity provisions that entitle them to separate counsel to protect their unique interests, which will often times conflict with the seller’s. Thus, given the enormous potential statutory damages that are at play in a TCPA suit or related government investigation, an ounce of prevention is worth a pound of cure, so bulletproofing terms of service and indemnification provisions should be a mobile marketer’s first line of defense against million dollar mistakes.
Mobile marketers should also adopt business practices that will satisfy the FTC’s standards of responsibility. Even though mobile marketers should adopt indemnification provisions that cover the costs of any government investigation, taking these steps will help minimize the chances of finding a government agent in your recycling bin in the first place:
Implementing these business practices will help minimize the chances that the FTC or FCC could accuse a mobile marketer of a head-in-the-sand approach to regulatory compliance, which, as noted above, is not a defense. Adopting these policies will therefore also prevent million dollar mistakes – and potential million dollar government forfeitures – that are common in the mobile marketing industry.