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Americans want to move toward an opt-in paradigm: panelist

NEW YORK - While mobile is a relatively new medium for advertising, marketing, content and commerce, some of the same rules that apply to other traditional channels apply here as well, according to a panel at the Mobile Marketing and Media 2010 conference.

The penalties for ignoring mobile rules and regulations, given the highly personal nature of the channel, are severe. The ?Mobile Media and Law: Legal Dos and Don?ts? panel, moderated by Mickey Alam Khan, editor in chief of Mobile Marketer and Mobile Commerce Daily, New York, discussed what publishers, content providers and media companies need to know.

?In looking at the legal framework for a mobile marketing campaign, it is important to specify how the message is delivered,? said Andrew Lustigman, principal partner of The Lustigman Firm, New York.

?The requirements of the various laws are fairly consistent, but it is the antithesis of what most people understand about marketing,? he said. ?In the mobile context, you?re dealing with an expressly opt-in world, and the risks associated are just tremendous.

?Marketers are trying to get their arms around the concept of opt-in, and many are struggling to figure out whether their opt-in procedures are sufficient to protect themselves, particularly given the data sharing that is going on.?

One example that gives marketers nightmares is the Satterfield vs. Simon & Schuster case for an SMS promotion related to author Stephen King's "The Cell" horror novel (see story).

A Federal Court of Appeals decision held that text messages were under the purview of the federal Telephone Consumer Protection Act that makes it unlawful to generate automated calls to mobile phones, even though no calls were involved, only text messages.

Nextone is the company gave away free ringtones to consumers, who had to agree via checking a box to get messages from the company and its partners in exchange for receiving these ringtones.

One of those partners was book publishing giant Simon & Schuster, which was saddled with a class-action law suit that went on appeal to the ninth circuit in California, which ruled based on a narrow interpretation of what affiliate meant?there was no corporate relationship between Nextone and the publisher, therefore the consent consumers gave was insufficient.

The case then went back to district court, and long story short, Simon & Schuster is going to be paying $10 million to settle the case and more than $2 million in legal fees, although there is a fairness hearing in August on this case.

A resolution is expected later this summer.

?Marketers must ask themselves, ?How do we get the consent that we need in a way that protects us?? Mr. Lustigman said. ?We?re seeing enforcement of these laws by plaintiffs? attorneys and not the FCC, which is a dangerous precedent, because the goal is to rack up attorneys? fees, not necessarily protect consumers.

?It?s an area where it?s very unfortunate, but that?s the way this channel has played out,? he said. ?We?re dealing with a law enacted in 1991, when no one used SMS?that?s the law we?re dealing with, and it?s nonsensical.

?Americans want to move more toward an opt-in paradigm, and other channels getting closed out?telemarketing, mail, email?and mobile is a very powerful mechanism, but unless you?re going to get explicit consent, you?re running a risk.?

There is also proposed privacy legislation by Boucher and Stearns making its way through Congress that has a specific specific section referencing location-base advertising.

?It uses a vague term called ?precise geolocation information,?? Mr. Lustigman said. ?If you?re collecting that, then you?ve got to get opt-in for that, both online and offline.?

Marketers can find more information on that case at http://www.DMAaction.org.

Another tip: Buying third-party databases is a no-no in mobile.

?The concept of relying on a third-party list is fraught with peril,? Mr. Lustigman said. ?It?s a critical thing to think about?don?t rely on someone else?s word that they?ve got someone?s consent, due your own due diligence.

?Remember that traditional rules of advertising apply,? he said. ?Make sure people understand disclosure of terms and people understand what they?re getting involved in.?

If marketers are unsure whether or not a planned campaign would be above board, the Mobile Marketing Association provides education and best-practice guidelines at http://www.mmaglobal.com.

?The MMA has a Mobile Code of Conduct to provide guidelines and best practices that mobile marketers should follow so that the FCC and FTC do not feel compelled to step in and regulate,? said Kristine van Dillen, director of industry initiatives and partnerships at the Mobile Marketing Association, New York.

?A lot of the tenets hold true for any of the channels that mobile enables, including location-based marketing, which is getting more attention? she said.

?How far can we go and what should marketers be aware of??

Data security is a key issue that marketers should investigate.

?Make sure consumers know how their data is being used, how long its being held, who it is being shared with, have clear opt-in and opt-out mechanism and provide consideration for participation,? Ms. Van Dillen said. ?Another imp part of mobile marketing is to give consumers an incentive to provide their information.

?Relevance is also important, providing something they want so they are receptive to marketing, such as coupons and discounts,? she said. ?Respect the consumer and make sure consumers are not getting what they would perceive as spam.

?When they are receiving text messages, which in the U.S. they have to pay for, make sure it?s because they want to receive it and it?s relevant.?

Some best practices are just based on common sense. And self-regulation is always preferable to government regulation.

?Not only having the opt-in is important, but also educating consumers what they?re actually opting in for,? said Mark Rosenberg, attorney at Sills, Cummis & Gross, New York. ?It also needs to be very easy to opt out.

?Make it easy for people to opt out of location-based marketing, because when the level of complaining rises to a certain level of noise, that?s when you?ll see regulation,? he said.

At the conclusion of the panel, Mobile Marketer's Dan Butcher interviewed Mr. Rosenberg. Here is the video:

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Here are some pictures of the panel: