Direct marketing, mobile phones, and consumer privacy: ensuring adequate disclosure and consent mechanisms for emerging mobile advertising practices.

• Author: King, Nancy J.

1. INTRODUCTION II. MOBILE COMMERCE AND MOBILE ADVERTISING III. M-ADVERTISING RAISES PRIVACY CONCERNS FOR CONSUMERS IV. PRIVACY REGULATION AND MOBILE ADVERTISING V. FEDERAL PRIVACY REGULATION AND M-ADVERTISING A. Breach of Privacy Policies as Unfair Trade Practices B. Spamming as an Unfair Trade Practice 1. "Opt-out" Consent is the Minimum Required to Send Unsolicited Advertising Accessed on Mobile Phones 2. "Opt-in" is Required to send M-Ads Directly to Mobile Phones Using MSCMs C. Telemarketing as Unfair Trade Practices 1. The Telemarketing Sales Rule 2. The Telephone Consumer Protection Act D. Mobile Carriers' Obligations to Protect Phone Subscribers' Personal Data 1. Customer Proprietary Network Information 2. Subscriber List Information and Access to Mobile Phone Numbers 3. Federal Preemption Limits State Law Regulation of Telecommunications Carriers That Aim to Enhance Telephone Subscribers' Personal Data Protection 4. Legislative and Administrative Proposals Aim to Enhance Consumer Privacy Protections for Telephone Records and Mobile Phone Numbers E. Obtaining Subscribers' Phone Records by "Pretexting" Is a Federal Crime F. Federal Statutes Protect Mobile Phone Users' Communications from Unlawful Interception or Unauthorized Access VI. STATE PRIVACY LAWS AND M-ADVERTISING A. State Consumer Privacy Laws Address Unfair and Deceptive M-Advertising Practices B. Common Law Privacy Torts May Apply to M-Advertising Practices C. Common Law Contract Principles May Limit or Facilitate M-Advertising Practices--Focus on Mobile Services Agreements VII. Is FEDERAL PRIVACY REGULATION ADEQUATE TO PROTECT CONSUMER PRIVACY IN M-ADVERTISING? A. Consumer Privacy and the Market Approach to Data Protection B. Privacy Policies Should Provide Notice and Disclose Company Privacy Practices C. Industry Models for Privacy Policies for M-Advertising. D. Fair Information Practices for M-Advertising Must Include Obtaining Appropriate Consumer Consent 1. Using Form Agreements to Obtain Consumer Consent 2. The Use of Privacy Enhancing Technologies as an Alternative to Privacy Policies E. Why the Market Approach to Data Privacy Does Not Currently Ensure Appropriate Consumer Consent for M-Advertising 1. Voice Calls Made to Mobile Phones 2. Electronic Messages Sent to Mobile Phones 3. Ads Displayed on Web Sites Accessed with Mobile Phones 4. Ads Generated by Adware or Spyware Loaded on Cell Phone Handsets F. Proposal for Regulatory Reform to Ensure Appropriate Consumer Notice and Consent for M-Advertising 1. The Need to Protect the Confidentiality of Cell Phone Numbers 2. The Need for Meaningful Short Privacy Notices for Mobile Advertising 3. The Need for Additional Protections Related to Consumer Location Data VIII. CONCLUSION I. INTRODUCTION

   Mobile commerce is gradually emerging as a new commercial environment in the U.S., facilitated by the increasing numbers of consumers who have mobile phones and other portable wireless electronic communications devices. (1) No longer simply a mobile telephone, mobile phones offer new communications and information services. (2) Mobile commerce will enable consumers to use their mobile phones to conveniently purchase goods and services (like parking passes or theater tickets) and to receive timely information content (like directions and maps). (3) Mobile commerce is also generating new advertising opportunities for suppliers of new and existing products and services directed at consumers through their mobile phones. (4) Consumers may welcome mobile advertising or view it as an annoyance. In either case, this Article argues that consumers and advertisers should be concerned about protecting consumers' privacy and personal data in this new environment.

   Two key privacy concerns for U.S. consumers arising from mobile advertising practices are: 1) the collection, use, and disclosure of consumers' personally identifying information that accompanies mobile advertising; and 2) the generation of unsolicited mobile advertising. Advertisers, mobile telecommunications carriers (mobile carriers), mobile phone manufacturers (handset manufacturers), and other third parties may all be involved in generating or delivering m-advertisements. For example, advertisers may direct their messages to consumers' mobile phones by calling mobile phone numbers to talk directly with consumers or generating voice, text, instant, or multimedia messages (e.g., video clips) to be delivered directly to or accessed by consumers on their mobile phones. Advertisements may also be displayed on mobile phones when consumers access Web sites using their Internet-access-equipped mobile phones. Adware programs loaded directly on consumers' phones by handset manufacturers or downloaded to cell phones from the Internet are yet another way to deliver mobile advertising. When the available methods of delivering mobile advertising are considered in conjunction with technological advances enabling advertisers to target advertising to consumers based on the geographic location of their mobile phones at a particular time (personalized location and time-specific advertising), the enormous potential of the mobile advertising market is apparent. Not so obvious are the consumer privacy implications and the very real possibility that consumers will view mobile advertising as privacy intrusive. (5)

   The primary goal of this Article is to assess the adequacy of existing U.S. laws designed to protect consumers' privacy and personal data with respect to advertising directed at or accessed by consumers through their mobile phones and other wireless communications devices. (6) The Article argues that consumers are entitled to fair information practices associated with mobile advertising that should include at least the right to receive meaningful notice and to give their informed consent to the collection, use, and disclosure of their personal information. It also argues that consumers have the right to choose whether to receive mobile advertisements. The Article offers insights and recommendations from a federal regulation and/or industry self-regulation perspective to ensure that mobile advertising directed at consumers will be accompanied by these two components of fair information practices. It is essential to find consumer privacy solutions for mobile advertising in order to build consumer trust that will enable the newly emerging mobile advertising industry to grow and flourish.

2. MOBILE COMMERCE AND MOBILE ADVERTISING

   Mobile phones may well be the next big consumer marketing opportunity. (7) M-advertising is a form of mobile commerce (also referred to as m-commerce or mobile e-commerce). (8) In m-commerce, wireless devices such as mobile phones, wireless-enabled handheld computers, vehicle-mounted technologies, and personal message paging devices are used to connect to mobile services. (9) M-commerce applications include m-advertising that is directed at or accessed on consumers' mobile phones, such as advertising sent in text messages to consumers. (10) As used in this Article, mobile advertising includes direct marketing as well as other forms of advertising accessed on mobile phones. (11) Mobile advertising has advantages over print or broadcast advertising because it allows marketers to send location- and time-specific, personalized advertisements directly to consumers. (12)

   A brief example of m-advertising shows how it will provide new avenues for advertisers to reach consumers with their messages:

   A person working in an office takes a break for lunch. Walking out of his office to buy some lunch, he receives a text message on his mobile phone advertising a lunch special at a nearby restaurant. The text message includes a discount coupon for the restaurant's lunch special. Several technologies enable the advertiser to sense that a cell phone is located near its restaurant and to direct a text message to this particular phone. (13) In this scenario, the consumer may benefit from having his mobile phone handy. If he is interested in visiting the restaurant, he may use it to call the restaurant for reservations and directions or to phone ahead to place an order and save time. He may also appreciate the discount coupon, which he can use by displaying it on his mobile phone. On the other hand, he may find this advertising practice quite annoying, perhaps akin to retailer stalking.

   Although m-commerce applications are gradually being introduced to U.S. consumers, the above scenario is not yet commonplace in the U.S. Examples include the Wall Street Journal Online's offers to subscribers to receive stock price and volume trading alerts on their mobile phones. (14) Subscribers with Web-enabled mobile devices may also receive "the latest Wall Street Journal financial and business stories, technology news, opinion and stock quotes on [their] Blackberry[R], Treo[R]or other mobile devices." (15) Another example is provided by the Foot Locker retail chain. Foot Locker collected several hundred thousand cell phone numbers from consumers in a program that spanned over three years. It then used them to send promotions by text messages to customers who had agreed to receive the promotions. (16) Moreover, Sprint, a telecommunications company, introduced a service in 2006 that allows fans of the National Football League ("NFL") to pay a fee to get information about NFL games on their cell phones. In 2007, the company offered an improved version for free to most of its customers. (17) Recently, Amazon.com began allowing customers to shop using Web-enabled cell phones, and Yahoo! began testing a program that allows advertisers to pay for sponsored search results through its Mobile Web service. (18) Also, Verizon Wireless recently announced that it would soon be placing banner ads on its customers' cell phone displays, known as "on deck." (19) In December 2007, Microsoft also announced that it was bringing ads to mobile devices. (20)

   Currently, marketers in...