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Direct Response Marketing

Legal Review: Avoiding Legal Pitfalls in Mobile Marketing

1 Feb, 2012 By: Linda A. Goldstein Response

Linda GoldsteinMobile marketing presents exciting new opportunities for direct response marketers. Consider just a few of these facts about its exponential increase:

  • There has been a 500-percent increase in mobile search since 2009.
  • Nearly 80 percent of smartphone users use those phones to help with shopping.
  • Nearly 75 percent of smartphone users have purchased as a result of using their smartphones while shopping.

Exponential growth in smartphone usage, enhanced ability to deliver interactive digital content, increased sophistication in location-based marketing software and the arrival of true M-commerce have all led not only to the true convergence of mobile and the Web but to the emergence of the smartphone as a powerful shopping tool and payment device. While mobile marketing is thus the next logical frontier for DR marketers, it presents many unique legal challenges.

In recent months, the Federal Trade Commission (FTC) has brought three cases against the developers and marketers of mobile apps, making clear that mobile marketing is on its radar screen. Congressional concerns over privacy-related issues have also led to hearings on mobile marketing practices and congressional inquiries into the data and privacy practices of Google, Apple and Facebook.

Marketers must remember that traditional advertising rules apply to mobile marketing campaigns, and the FTC has made clear that it will apply the same standards. Recently, the FTC brought an action against two developers and marketers of mobile apps — AcneApp and AcnePwner — that claimed to treat acne through the use of blue- and red-light therapy emitted from the mobile device. The developers relied on studies published in a journal in Great Britain, but the FTC found the studies to be insufficient to support the claims being made.

It is interesting that the FTC stepped in to bring this case as these apps could have been challenged by the Food & Drug Administration (FDA) as constituting medical devices. The FTC sent a clear message to the industry that advertising claims made in the mobile space will be subject to the same standards as advertising claims in traditional media. In addition, for DR marketers that enter into revenue-sharing arrangements with mobile app developers, the FTC is likely to hold the marketer responsible for any claims made by that app developer under its ever-expanding net of liability.

Privacy and data security is undoubtedly the most significant legal issue facing mobile marketers today. Consumers who download mobile apps are often not aware of what information is being collected and how that information will be used. Both the FTC and Congress have made clear that the same privacy principles that apply to website operators should apply to mobile apps. While many DR marketers may not be offering or distributing apps, to the extent that they are engaged in advertising within apps they should also ensure that consumers are aware of the way in which personal data is being collected and used and that these uses are consistent with the advertiser’s own privacy policies.

The collection of geo-location data is another area of particular concern to both Congress and the FTC. Last spring, Congress initiated an inquiry after reports that geo-location data was being collected by Apple and Google from users of the iPad, iPhone and Android smartphones. The industry has responded with self-regulatory guidelines, but this remains an area of heightened concern.

While there is currently no specific legislation governing privacy in the mobile space, the FTC has made clear that it considers the failure to provide consumers with notice of your privacy policies and the failure to adhere to your stated privacy policies to be a deceptive and misleading act in general violation of the FTC Act. Thus even in the absence of specific legislation the FTC has brought dozens of cases against companies based on their failure to provide adequate notice of their privacy practices, and/or their failure to adhere to there stated privacy policies and promises, including those against Twitter, Google and Facebook. The lesson from these cases is clear — when it comes to your privacy policies, “say what you do and do what you say.” ■

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