Posted by: Adam Solomon
June 30, 2009
Topic: Marketing and Advertising Law

On June 24, 2009, Florida's Attorney General announced a $1.5 million dollar settlement with Verizon Wireless and Alltel over "free" ringtone offers. The settlement, the latest in a continuing series of enforcement action in the mobile space by the Florida Attorney General's office, is very important to mobile marketers because it require the implementation of a series of detailed "best practices" standards that impose significant compliance obligations on those involved in marketing mobile content.

Settlement with Verizon Wireless

With this latest settlement, the Florida Attorney General's Office continues to be at the forefront of regulating the mobile content industry. In the past years, this office has been involved in several Florida settlement agreements with various entities in the mobile space, including marketers, billing aggregators, content providers and wireless service providers.

The Attorney General's settlement with Verizon Wireless is similar to the one that office reached with AT&T Wireless back in February 2009. Both settlements require the wireless carriers to contractually cause its content providers and advertisers to adhere to certain requirements. However, the Verizon Wireless goes well beyond the AT&T Wireless settlement in terms of the level of detail required for compliance. In addition, the agreement will impact virtually all involved in the marketing of mobile content because it requires Verizon Wireless to include the provisions in future contracts with any company that advertises, aggregates billing for, offer or sells mobile content. Such details include:

A prohibition on the use of the terms "free," "complimentary," 'no charge," "without charge," or any other term that reasonably causes a consumer to believe that he or she may receive something of value entirely or in part without a requirement of compensation, unless the initial advertisement (sponsored links, organic links, email subject lines, banner ads, and pop-ups) that reaches the consumer clearly and conspicuously states that the free item will be received pursuant to the consumer's authorization of billing for a paid subscription. For example, a free ringtone offer requiring a consumer to subscribe to a monthly subscription plan at a cost of $9.99 per month shall say, "Free ringtone with paid monthly subscription of $9.99/month."

• All web-based advertising must disclose price and billing period information at least one time in a minimum of 12point font size (in conformity with web standard font size equivalents) and minimum color contrast value of 125. This disclosure must be placed within 125 pixels above, below, to the left, or to the right of the of the cell number submit field and P.I.N. submit field. The price point must be disclosed in numerical format "0-9" and include dollar sign "$" with no other text. For example, "For $9.99 per month."

• The price and billing period disclosure must be made above the fold (the section of the web page that is visible without scrolling).

• The following must be disclosed on the cell submit page and P.I.N. submit page, with a minimum of three lines of text above the fold: 1) whether other charges apply; 2) if the offer is for a recurring subscription plan, such details must be provided; 3) how to cancel; 4) the mechanism for charging the consumer; 5) pricing disclosure, subscription disclosure and opt-out instructions; and 6) a link to the full terms and conditions.

Additionally, Alltel will also be required to adopt these "best practices" under the company's acquisition by Verizon Wireless.

Impact on the Mobile Space

The Verizon Wireless settlement will likely have a significant impact on the marketing of mobile content because it Verizon Wireless is now required to include these exact compliance terms in its contracts with content and service providers. The settlement also specifically states, "The Attorney General shall make good faith efforts to impose the same minimum standard...on all other wireless services prodders that have entered into an AVC (Agreement of Voluntary Compliance), or will enter into an AVC, with the Attorney General."

It is evident the Florida Attorney General will continue to be active in this space and all players should be prepared to meet the standards imposed upon Verizon Wireless. Although mobile content is by its very nature without state boundaries, the federal enforcement authorities have been relatively silent in this space, deferring it seems, to the state of Florida to set national standards.

An article on this settlement by Andy Lustigman and Adam Solomon appeared in Mobile Marketer.

For more information on Mobile Phone Marketing Law, please click here.

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