Violated Mobile Marketing Law

The specific mobile marketing law that AT&T violated is mobile cramming. This violation involved AT&T company planning illegal third-party charges and including them on their consumers’ phones bills without their consent.

These charges were based on the exchange of subscriptions of specific text messages and ringtones, relationship advice containing love, factoids, and horoscopes. It is important to note that AT&T was not the only offender for this crime, and it also involved Acquinity and Tatto companies. This unethical marketing move led to a crime that later cost AT&T millions meant to refund the customers.

Consumer Negative Consequences

The key negative consequence of AT&T  mobile cramming was cost. In other words, the customers were paying an extra fee that amounted to $9.99 on these subscriptions despite not having ordered or used the service. The most unfortunate thing is that some of the customers continued being charged on their mobile bills for years without their realization.

Therefore, the little charges accumulated over time for individuals, leading to large costs. On the other hand, the companies and institutions involved had increased expenses without increased productivity. Mobile cramming involves spamming on the client, which utilizes IT resources and is also time-consuming to eradicate spam. Also, spams are time-consuming for customers because they have to spend time clearing junk mail. Moreover, spams annoy most customers.

Possible Penalties Levied on AT&T for Legal Considerations Violations

Obviously, when a company violates any legal violations, it must receive some penalties. These penalties can be monetary or even suspension of licenses to operate for a given period. In the case of AT&T, it received a penalty of paying refunds to its customers, which amounted to $88 million. This penalty was imposed by the Federal Trade Commission, commonly known as FTC. These refunds were to be given to 2.7 million AT&T  customers.

Among them were 2.5 million current customers and 300,000 older customers(“FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming”, 2016). AT&T was expected to pay these refunds within 75 days, where each customer was to receive a check for $31. The FTC also stated that the checks would be void if 60 days lapsed without them being cashed.

Also, AT&T received a fine that amounted to $105 million due to a violation n of the CAN-SPAM Act. Note that AT&T was the one to incur the transaction costs of refunding because, according to FTC, customers should neither pay nor provide account details to offset refund checks.

Mobile Marketing Campaign Actions Which Lead to Ethical Promotions.

There are two key actions for a mobile campaign marketer to remain ethical. The first practice is obtaining the customers’ consent whenever the marketer participates in mobile campaigns. The marketers should send consent forms t customers via emails or at least a message that requests the consumer to permit them to receive the mobile promotion messages or emails.

The second action is that the marketer should always give the customers an opt-out option on the marketing campaign (Scholz & Duffy, 2018). In other words, if the mobile marketer sends the messages, they should have a code that the customer to say no to the promotion. Alternatively, if the emails are sent, they should have an unsubscribe link that customers can use anytime they consider opting out. Additionally, the mobile marker should honor the customer’s request to opt-out without confusing extra requirements.

To view the exact case proceeding please check out the recorded video below. FTC Chairwoman Edith Ramirez will join FCC Chairman Tom Wheeler and State Attorney Generals representing all 50 states and the District of Columbia to announce a major U.S. government enforcement action against AT&T (Joint Press Conference Announcing AT&T Mobile Cramming Settlement, n.d.)

https://www.ftc.gov/media/71074

References

FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming. Federal Trade Commission. (2016). Retrieved 10 April 2022, from https://www.ftc.gov/news-events/news/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were-subjected-mobile-cramming.

Joint Press Conference Announcing AT&T Mobile Cramming Settlement. (n.d.). Federal Trade Commission. Retrieved April 10, 2022, from https://www.ftc.gov/media/71074

Scholz, J., & Duffy, K. (2018). We ARe at home: How augmented reality reshapes mobile marketing and consumer-brand relationships. Journal of Retailing and Consumer Services, 44, 11-23.

Written by

Alexander Usuanlele