6-2 Blog: Ethical and Legal Considerations With the AT&T Case

Ethical Marketing

What specific mobile marketing law was violated in the AT&T case?

The specific mobile marketing law that was violated in the AT&T case is known as mobile cramming. Essentially, this telecommunications company placed unauthorized third-party charges on its customer’s phone bills. These fees were for ringtones and text message subscriptions that contained love tips, horoscopes, and fun facts. But AT&T isn’t the only company that has engaged in unethical and illegal mobile marketing activities. Groupon, the e-commerce site that connects consumers with local merchants, was recently warned about sending spam emails. Basically, those who had given their email address to Groupon were automatically subscribed to multiple newsletters. And many unsubscribe requests were made, but Groupon did not take action within five business days as required by the CAN-SPAM Act (“Groupon,” 2019).

What are the negative consequences to the consumer?

In the AT&T case, the negative consequence to the consumers was cost. They were paying an additional charge of $9.99 for a service that they did not order or use (“FTC,” 2016). It’s unfortunate, but some people had cramming charges on their phone bills for years before they were discovered. And those “small” charges certainly added up over time. For businesses owners that were involved with Groupon, the result was wasted productivity and increased expenses. The reason being is that spam tends to require IT resources, and it may take them some time before they can get rid of it. Spam also cost the consumers time as they had to wade through a series of junk mail to find legitimate ones. And, of course, many people are offended by this and find it extremely annoying (Walker, 2008).

What are the possible penalties levied on a company for violating legal considerations?

Penalties are levied on companies when they violate legal considerations. Using AT&T as an example, the Federal Trade Commission (FTC) forced them to pay $88 million in refunds (“FTC,” 2016). And they were ordered to pay a hefty fine, which was $105 million. Also, those who violate the CAN-SPAM Act by sending spam are subject to penalties as well. Under this act, each separate email in violation will cost the company up to $42,530 (“CAN-SPAM Act,” 2019). That being said, it’s best for every company to comply with the laws that surround mobile marketing. Otherwise, it could be quite costly.

What kind of actions must a marketer take with any mobile marketing campaign to remain ethical (e.g., asking for permission or prohibiting the practice of spamming)?

To remain ethical during a mobile marketing campaign, a marketer must ask consumers for their permission to contact them. Also, every marketing message sent should include a simple and easy to use mechanism through with the customer can opt-out of receiving future messages (“Mobile Marketing” 2019). Including a link in an email or having people text STOP to a particular number are a couple of ways that this can be done. The marketer also needs to honor all opt-out requests. Spamming should also be avoided because bombarding consumers with unwanted information is unethical. It violates the boundary of respect for their time and space. As equally important, marketers must be transparent about how they will use a consumer’s private information. And they need to take the necessary steps to ensure that it’s secure. Now, market ethically and I wish you the best of luck with your campaign!

References

CAN-SPAM Act: A Compliance Guide for Business. (2019). Retrieved from https://www.ftc.gov/tips-advice/business-center/guidance/can-spam-act-compliance-guide-business

FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming. (2016, December 8). Retrieved from https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were

Groupon Warned About Spam Emailing. (2019). Retrieved from https://www.getsafeonline.org/news/groupon-warned-about-spam-emailing/

Mobile Marketing: Guidelines for Ethical Business Practice. (2019). Retrieved from https://thedma.org/accountability/ethics-and-compliance/dma-ethical-guidelines/mobile-marketing/

Walker, A. (2008, September 9). Spam: Unwanted Email from Hell. Retrieved from http://www.informit.com/articles/article.aspx?p=1234199&seqNum=6

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