While mobile marketing is a very effective strategy for companies, it is very important to understand the ethical and legal aspects of this type of marketing. An example of a company violating mobile marketing law was AT&T when they were in violation of “mobile cramming”. Mobile cramming is “A modern version of a long-time scam in which consumers’ phone bills are used as a vehicle for unauthorized charges placed by third parties (FTC, 2019).” In this case, AT&T added third party charges to customer’s bills without their permission.
Consumers in the AT&T situation had third party charges of typically $9.99 each month. This created a bad experience for the AT&T customer as they were taken advantage of and charged money for things they were unaware of. In total more than 300,000 AT&T customers will be receiving compensation from the $88 Million refund that AT&T was ordered to return to customers. Each customer would be receiving around $31 (Katz, 2019).
Another example of mobile marketing legal issues was with Papa Johns in 2010. Papa Johns faced a $250 Million dollar lawsuit for sending unwanted text messages to customers. It was found that customer’s were getting 15-16 text messages in a row even during the night (Smith, 2012).
When marketers violate mobile marketing laws typically companies can face step penalties such as fines. In the At&T example, the company faced a $105 Million dollar fine for the mobile cramming issue (Mamiit,2016). For larger companies, such as AT&T, these types of fines are financially tough, but the company can recover. For smaller companies a fine like this could destroy the company and cause the company to fold or go bankrupt.
Companies will want to do certain things to make sure they remain ethical. First, it is important to give customers a choice on if they want to receive marketing materials such as emails or text messages. It is also important that the company remain transparent on what information they are collecting from the customer. Lastly, it is very important companies protect the information they are collecting from their customers. Companies need to do all they can to protect the customer’s information and prevent data breaches (Roesler, 2021).
References:
FTC. (2019, August 22). Mobile cramming. Retrieved April 11, 2021, from https://www.ftc.gov/news-events/media-resources/mobile-technology/mobile-cramming
Katz, M. (2019, May 23). FTC providing OVER $88 million in refunds to AT&T customers who were subjected to Mobile cramming. Retrieved April 11, 2021, from https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were
Mamiit, A. (2016, December 09). AT&T to Refund $88 million to customers in Mobile Cramming settlement With FTC. Retrieved April 11, 2021, from https://www.techtimes.com/articles/188300/20161209/at-t-to-refund-88-million-to-customers-in-mobile-cramming-settlement-with-ftc.htm
Roesler, P. (2021). Three legal issues to keep in mind with mobile marketing. Retrieved April 11, 2021, from https://www.webmarketingpros.com/three-legal-issues-to-keep-in-mind-with-mobile-marketing/
Smith, O. (2012, November 13). Papa John’s FACES $250 million SPAM LAWSUIT. Retrieved April 11, 2021, from https://money.cnn.com/2012/11/13/technology/mobile/papa-johns/
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