Florida AG strikes $1M settlement with Mobile Messenger
Continuing his pursuit of errant mobile firms, Florida's attorney general has wrapped up a $1 million settlement with Mobile Messenger Americas Inc., a marketer of content for mobile phones and billing aggregator for mobile content promotions.
Per the Jan. 23 settlement with Florida attorney general Bill McCollum's cyber fraud section of his economic crimes division, Mobile Messenger Americas will be required to disclose the price of mobile content or services and other material terms of purchase conspicuously and specifically disclosed on all online transaction screens.
"Every time mobile content is purchased, the person making that purchase deserves to know what he or she is getting and will ultimately end up paying," Mr. McCollum said in a statement supplied by his office in Tallahassee, FL.
"These compliance standards are leading the nation in reigning in the mobile content industry and holding all parties accountable," he said.
Based in Santa Monica, CA, Mobile Messenger Americas offers mobile content such as subscription text products for an individual's mobile phone.
Although the content was marketed through Internet advertising, the ads often failed to clearly and conspicuously describe the price and terms of the subscription served, according to the Florida attorney general. Consequently, consumers were unwittingly being signed up for costly monthly subscriptions.
After receiving a number of complaints, Mr. McCollum's office began investigating last year. The investigation showed that thousands of Florida consumers had gotten mobile content charges on their mobile phone bills for downloads that they neither sought nor authorized.
This settlement comes more than a month after Mr. McCollum undertook a similar $1 million settlement with Media Breakaway LLC, a mobile content marketer based in Colorado (see story). The charges were similar to the latest investigation.
Like the earlier settlement, the $1 million fine to the attorney general's office will be used to fund more cyberfraud investigations and other consumer protection services.
"Our office is currently investigating eight companies, including wireless carriers, advertising networks, content providers and bill aggregators," said Sandi Copes, communications director at the attorney general's office.
"It is true that there are countless companies engaged in potentially deceptive behavior, but we're starting with the larger companies and working our way down, enforcing compliance standards as we go and setting examples for other companies to follow," she said.
"There are no other State AGs working on similar initiatives, so we're doing this work on behalf of the nation and we're confident the industry is changing as a result."
In this Q&A, Gonzalo Mon, attorney with Washington law firm Kelley Drye & Warren, warned marketers against hiding the true costs of products in the small print. "That's never a good idea," he said. "Advertisers are required to clearly and conspicuously disclose the material terms of their offers."
What's the gist of this settlement?
Mobile Messenger Americas Inc. provides various types of subscription-based mobile content, including ringtones, trivia games and text alerts.
The Florida AG alleged that the company failed to adequately disclose the costs and terms of its subscription services.
As a result, many Florida consumers signed up for the services without knowing they would be charged a monthly fee.
When consumers found the unwanted fees on their mobile phone bills, they complained to the attorney general.
As we've seen before, the Florida attorney general has been receptive to such complaints.
As part of this settlement, Mobile Messenger agreed to clearly and conspicuously disclose the price and other material terms of any mobile content on all online transaction screens.
In addition, the company must pay $1 million to the attorney general's office. That money will be used to fund additional cyber fraud investigations and other consumer protection services.
So the Florida crusade continues?
Yes. The Florida attorney general has been very active in this area.
Last month, the AG announced a similar settlement with Media Breakaway in which the company also agreed to improve its disclosures and pay $1 million.
And prior to that, the AG had announced similar settlements with companies like AzoogleAds and AT&T over similar issues.
We expect Florida to be on the forefront of this issue in the years to come.
Moreover, as you know, Florida is working on a more formal set of guidelines that will dictate where and how terms should appear on a mobile flow.
Until those guidelines are released, mobile marketers need to take a close look at these settlements and ensure their practices comply with the laws.
Haven't companies learned yet from previous prosecutions?
Although most companies have learned from the previous settlement, it is surprising that some have not.
They had better learn quickly, though, because Florida is paying close attention to mobile marketing practices and the costs of getting this wrong are significant.
What's the core problem here?
The core problem is that some marketers tout the benefits of their services in the "big print," but hide the costs and other material terms in the "small print." That's never a good idea.
Advertisers are required to clearly and conspicuously disclose the material terms of their offers.
In general, this means that a disclosure has to be made prominently and in close proximity to the claim it modifies.
Moreover, a disclosure cannot contradict the claim it modifies.
Therefore, companies can't advertise something as being "free" and bury details about the costs in the fine print.
So if a mobile service or content costs money, advertisers need to be up-front about that.
Will such problems really curb improper billing issues?
Nothing leads to more complaints than unexpected charges.
Undoubtedly, companies may get complaints about billing even if they do everything right.
But if mobile marketers take the time to ensure their advertisements clearly disclose all material terms, the likelihood of complaints from consumers and inquiries from regulators are much smaller.
Again, the costs of getting this wrong can be very significant, so it pays to make sure that every advertising campaign complies with applicable laws.