1. Mobile Marketing Legal Risks 2.0
David S. Almeida, Partner, Sedgwick LLP
Twitter handle: @almeidage; Company handle: @sedgwickllp
Event hashtag #MobiU2012
Presented by the Heartland Mobile Council

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Overarching Themes
 Increasing focus on privacy by FTC, FCC, Congress & Plaintiffs’ lawyers
 Prevailing sentiment is that companies slow to enact proactive measures
 Patchwork quilt of potentially applicable laws = very confusing and
treacherous state
 Plaintiffs’ lawyers assert ill-fitting theories because law lags technology

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Privacy Overview - Basics
Fair Information Practice Principles (FIPP)
 Notice
- What information will be collected and how used
 Choice/Consent
- Options for use/sharing, opt-in v opt-out
 Access
- Consumer options to review, update, delete information
 Security
- Measures taken to protect and secure data

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Many, Many, Many Laws & Regulations
Potentially Apply
A veritable alphabet soup of laws and agencies that either explicitly or
implicitly regulate privacy, including:
1. The FTC Act (Section 5)
2. State Unfair and Deceptive Practices Acts
3. State Privacy Laws, incl. Breach Notification req
4. CAN-SPAM
5. TCPA, FCC regulations & Do-Not-Call Rules
6. Children’s Online Privacy Protection Act
7. Gramm-Leach-Bliley Act
8. Computer Fraud and Abuse Act
9. HIPPA / HITECH Act
10. Video Privacy Protection Act
11. Fair Credit Reporting Act (FCRA) & Fair and Accurate Credit Transactions Act
(FACTA)

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In addition to numerous federal laws, also
have to contend with state law
 46 states, the District of Columbia, Puerto Rico, and the Virgin Islands
each have their own security breach notification law
 The only states without a security breach law in place are Alabama,
Kentucky, New Mexico and South Dakota

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FTC Suggested Best Privacy Practices
The Federal Trade Commission Act 5 – 45 U.S.C. 45(a)
 Section 5 of the FTC Act prohibits “[u]nfair methods of competition in or affecting
commerce, and unfair or deceptive acts or practices in or affecting commerce . . . .”
 Imposes a standard of reasonableness for conduct relating to breaches
- Audit
- Data Minimization
- Take reasonable steps to protect PI
- Train employees
- Accurately disclose
- Monitor web applications
- Easy to understand privacy policy

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“Protect the consumer, and you protect the
opportunity”
— Michael Becker, Managing Director for North America, Mobile Marketing
Association
1. Protect consumers’ privacy
2. Give consumers choice in terms of timing and method of engagement
3. Provide CLEAR AND CONSPICUOUS NOTICE to consumers of what
they can expect when they engage in marketing program, including
information re: opt-out

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“The screen is small, but section 5 [of the FTC Act] still applies.” --
FTC Commissioner Brill
 Geo-targeting
• Location, Location, Location
• Brown v. Google & Gupta v. Apple
 App-based
• In re iPhone Application Litigation
 Online tracking
• Behavioral advertising
• Google, Microsoft and many others
 Mobile, Social Commerce & other e-commerce claims
• Gift buying, daily deal sites (expiration date cases)
• FACTA & Song-Beverly

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Mobile: Different LEGALLY from Other
Forms of Marketing
1. Requires affirmative consent (opt-in); most
other forms of DM do not (CAN-SPAM, for
ex, opt-out)
2. Lack of sufficient space for adequate
disclosures (hashtags, links)
3. Absence of uniform national regulations or
laws (courts apply TCPA (passed in ’91) to
mobile)
4. Cost – consumers complain that unlike
other forms of DM, SMS actually costs
them $ (in addition to privacy concerns)

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Telephone Consumer Protection Act (TCPA)
 Originally passed in 1991
 Broadly applicable to direct marketing via calls, faxes and texts
 Recipients May File a Lawsuit on Behalf of a Class of Similarly
Situated Persons (a Class Action Lawsuit) Seeking:
 Actual monetary damages incurred or
 $500/per violation or $1,500 for each ―willful‖ violation.
 No cap on amount of ―damages‖ recoverable (unlike many other
consumer protection statutes)
 For certain judges, plaintiffs’ burden on proving willfulness is
very easily met

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A Text is a Call Under The Law
Satterfield
Satterfield v. Simon & Schuster, Inc.
569 F.3d 946 (9th Cir. 2009)
Nextones.com
• Whether a text message is a “call” under
the TCPA?
• Whether text was sent with plaintiff’s Mobile Information
“prior express consent”? Access Co.
Ipish!
Simon & Schuster

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Satterfield v. Simon & Schuster, Inc.
• 9th Circuit reversed MTD and held that a text is a “call” under
TCPA
• Plaintiff did not give ―prior express consent‖ to Simon & Schuster to
text her
• Case ultimately settled: creation of a $10M settlement fund with
plaintiff’s attorneys receiving $2.7M

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Mobile Marketing Lawsuits 2.0
• SIGNIFICANT FRANCHISOR/EE ISSUES
• Recent Jiffy Lube Settlement
- b/t $35M and $47M in cash & services
- $17.29 gift certificates or $13 cash
• Question of control – Dominos, Taco Bell & PH

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Is a Friend Forwarded Text a Call Under the
Law?
• Depends – no court has ruled yet
• Case in Florida involving largest Pizza Hut franchisee
• We assert that a decision by a mobile subscriber to input a friend’s
number and send them a text is not an automated telephone
dialing system as required under the law

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Increased Regulatory Scrutiny of
Robo-calling Mobile Phones
FCC Regulations
• Recent FCC Final Rule (effective July 11, 2012) requires prior
express consent for “autodialed or pre-recorded non-
telemarketing calls to wireless numbers”
• If a telemarketing call (promotional) consent must be in writing
• MANY, MANY class actions filed since

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Recent FTC Enforcement Actions

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Increasing Focus on Apps
(particularly children-focused apps)
Privacy and Apps
 FTC Report on Children’s Apps – “DisAPPointing”
 Lack of privacy policies for kids apps
 California Online Privacy Protection Act applies to apps
(requires the posting of a privacy policy)
 FTC Business Guidance to app developers (9/5/12)
 Emphasis on complying with FIPP
 http://www.ftc.gov/opa/2012/09/mobilapps.shtm

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Privacy Concerns with Promotions
• Post privacy policy on any page data is collected & in
provided a link in contest rules
• Only collect data necessary & only use data for contest
entry and to notify winner
• Do not auto enroll customers into loyalty programs
• If entrant is a member of loyalty program, don’t connect
data

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What’s next?
• Continued focus on mobile privacy and geo-location
issues
• Mobile Device Privacy Act (introduced Sept. 2012)
• Other federal privacy bills introduced
• Plaintiffs’ class action bar too remain incredibly active
• Very attractive cases ($500 to $1,500 per violation, without
having to prove actual damages)

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Key Takeaways
 Privacy policy and terms of use
• Clear and prominent disclosure of data sharing, protection
practices
• Express consent based on disclosure
 Class Action Waiver
• Clear and conspicuous
• Cannot substantively modify without notice to user
 Easy to access, store and delete PI
 Disclosure of marketing partners (Shine the Light law)
 Strong indemnity agmts from vendors &affiliates

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Contact Information
David Almeida, Sedgwick LLP
• 312.849.1985
• david.almeida@sedgwicklaw.com
• LinkedIn:
• www.linkedin.com/in/davidsalmeida
• twitter.com/almeidage
Digital Media Law Blog: http://digital-media-law.com

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About Sedgwick
Sedgwick provides its clients with informed corporate and transactional
advice, effective litigation strategies, and long-term litigation avoidance
counsel. With more than 350 attorneys in offices throughout North
America, Bermuda* and Europe, Sedgwick’s collective experience spans the
globe and virtually every industry. For more information about Sedgwick, its
attorneys, and its services, visit the firm’s website at
www.sedgwicklaw.com.

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Disclaimer
• This presentation is for general informational purposes only and is not legal
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