8 Best Practices to Help You Manage Risks Associated With Mobile “Big Data”

How to avoid TCPA risks and mobile app and ad FTC trouble when using mobile big data marketing, texts, and calls to connect with consumers.

June 19, 2014

The more than six billion mobile devices in use worldwide offer companies access to a possible treasure trove of customer information in almost every consumer segment. These devices now create a constant stream of data—from user location to transactions and activity—that companies can analyze to provide insights on key consumer sentiment, behavior, and movement patterns. And, through techniques like geo-fencing, augmented reality packaging, and e-coupons, mobile devices also serve as an effective delivery mechanism for near real-time, highly personalized messages and incentives regarding goods and services. Gathering, assessing, and capitalizing on that data is mobile's big data promise.

Yet the opportunities accompanying mobile's big data possibilities are not limitless. Government policies and privacy laws—some industry specific—create very real exposures that must be considered when leveraging mobile big data. To begin to take advantage of the brand building mobile big data offers AND avoid the liability big mobile data can create, companies need to understand the privacy and protection laws that impact mobile and mobile big data.

Old School for Mobile: Rules for Phone Calls and Texts
As the mobile marketing field is still largely unregulated, the clearest rules for interacting with consumers via mobile devices come from the Telephone Consumer Protection Act ("TCPA"), 47 U.S.C. § 227 et seq. The TCPA restricts the use of automated telephone dialing systems ("ATDS") to send unsolicited telemarketing and text/SMS messages. States and individuals who prove a violation of the TCPA may receive a $500-per-violation award, which can triple to $1,500 if the violation was willful or knowing.

A majority of states now have laws similar to the TCPA that cover the use of ATDS to deliver marketing messages. As such, TCPA litigation has increased significantly in recent years, and companies have paid tens of millions of dollars to resolve consumer TCPA class actions.

Changes in these regulations are also causing a great deal of challenges. One such change affecting mobile big data occurred on October 16, 2013, when the TCPA regulations updated to require prior express written consent for all telemarketing robocalls and text/SMS messages to wireless numbers and residential lines. These new requirements mean that many companies' "opt in" lists are now insufficient and/or obsolete. Companies that failed to contact customers before the October deadline are now struggling with how to get the consent they need without running afoul of the TCPA's restrictions.

Additionally, companies must ensure that any third-party service providers are aware of the TCPA's increased consent requirements. Under the TCPA, courts may hold companies vicariously liable for calls made through third-party telemarketers. The FCC has said a formal agency relationship does not need to exist for this kind of liability to arise—and some courts considering liability based on third-party conduct have agreed.

Mobile Apps and Consumer Privacy
Given the potential TCPA-related liability, many marketers are using mobile apps to reach customers as a means of bypassing the potential complications of text messaging or phone calls. And, because consumers often provide personal information when they download and sign-in on apps, apps provide more specificity for data-driven marketing efforts.

But mobile app marketing efforts are not entirely unrestricted. While no current law or regulation directly targets mobile applications at the federal and state level, both the FTC and the California Attorney General have issued guidelines aimed at protecting consumers. These guidelines reflect government concerns about the sometimes unintended access to consumers' personal information created by mobile's big data capabilities.

For example, the makers of the social networking app "Path" routinely accessed users' address books, collecting and storing information about users' contacts without disclosing this practice. Information collected included the contacts' names, birthdays, email addresses, and Twitter handles. Path also obtained personal information from users under the age of 13 without parental consent—a violation of Children's Online Privacy Protection Act. The FTC brought an enforcement action against Path, which Path settled in 2013 for $800,000 without an admission or denial of wrongdoing.

The FTC's enforcement action against Path shows that the FTC will actively enforce consumers' mobile privacy rights. Similarly, California—a technology and innovation center— has effectively set the industry's privacy standard by issuing guidelines to app developers, app platforms, and advertising networks. As a result, even though they are "just guidelines," current mobile privacy standards deserve close attention.

8 Best Practices for Managing the Legal Risks of Mobile Big Data
The marriage of big data and mobile offers many industries rich opportunities to engage with consumers. In light of this, companies may find it worthwhile to manage the legal risks involved in mobile marketing. Some suggested best practices include:

For SMS/text messaging:

  1. Vet current text message marketing lists to make sure they comply with updated TCPA rules regarding written consent.
  2. Get good legal and technical advice on how to obtain needed additional consent.

For apps and mobile ads (adapted from California Attorney General Recommendations):

  1. Prepare a privacy policy that describes your collection, use, disclosure, and retention of personally identifiable user data.
  2. Provide your privacy policy to the app developers who enable the delivery of targeted ads through your network. Make sure the app developers make a link to your privacy policy available to users before they download and/or activate the app.
  3. Avoid delivering ads outside the context of the app. Examples are delivering ads by modifying browser settings or placing icons on the mobile desktop.
  4. Use enhanced measures (like push notifications) to obtain prior consent from users before accessing personal information such as phone number, e-mail address, or geo-location.
  5. Transmit user data securely, using encryption for permanent unique device identifiers and personal information such as an e-mail address or phone number.
  6. Create and implement a plan for secure data storage and timely data destruction.

For Best Results, Know Your Audience and Your Risks
Today's mobile consumers are continually adapting to the growing mobile landscape. This includes consumers gaining a greater understanding of the privacy implications that come from carrying a data-transmitting and -receiving device with them at all times. Companies that understand the needs and preferences of their consumers as well as the risks associated with mobile marketing efforts can put mobile big data to work to build brand awareness, engagement, and loyalty—and avoid running afoul of the existing and emerging consumer privacy laws.

The articles on our website include some of the publications and papers authored by our attorneys, both before and after they joined our firm. The content of these articles should not be taken as legal advice. The views and opinions expressed in this article are those of the author(s) and do not necessarily reflect the views or official position of Robins Kaplan LLP.

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