FTC's Jamster case: 5 tips for mobile marketers

So people were taking a few minutes to play the free version of Angry Birds on their Android device.  At some point between the Giant Slingshot and the Mighty Eagle, they got a "Virus Detected" warning.  But according to an FTC lawsuit, that scary-looking security alert was phony and just a way for Jamster (the court papers use the corporate name Jesta Digital) to place charges on people's cell phone bills without their express consent. Of course, a settlement is legally binding only on that defendant. But if you're monitoring the mobile market (or making money from it), here are five tips to take from the FTC's case against Jamster:

1.   Long-standing truth-in-advertising principles apply to mobile marketing. “It’s mobile.  Anything goes!”  How many times have you heard that?  We can respond in three words:  Wrong, wrong, and wrong.  Whether you’re selling Model Ts, poodle skirts, or the latest mobile service, false statements — like Jamster’s phony malware warnings — are illegal under the FTC Act. So enough already with the “anything goes” talk. Like every other advertiser, mobile marketers are covered by federal truth-in-advertising standards.

2.   Watch out for WAPacious billing practices.  According to the complaint, Jamster used WAP billing, a new-ish method that captures consumers’ mobile phone information and uses it for billing.  But often all it takes to trigger WAP billing is a simple tap of a finger on a screen.  So consumers may be billed as the result of just pushing a button or two.  If companies uses deceptive tactics to get people to push those buttons, a double opt-in won’t immunize them from law enforcement action. 

3.   Disclose the details clearly and prominently.  Many consumers that Jamster illegally billed did nothing more than click a button that said PROTECT YOUR ANDROID TODAY.  Buried in fine print was the clear-as-mud statement, “For $9.99/month get 20 credits to use on ringtones and more.”  We’ve said it so many times that we really should set up a keyboard shortcut, but here we go again:  It’s the law — and it’s always been the law — that if the disclosure of information is necessary to prevent deception, the disclosure must be clear and prominent.  Tiny print, buried text, and “It’s all Greek to me” wording won’t work in any medium and most certainly won’t work on the small screen of a mobile device.  Parts V and VI of the proposed order offer details on what Jamster has to disclose in the future and how they have to disclose it.  Another resource for companies looking for guidance: .com Disclosures:  How to Make Effective Disclosures in Digital Advertising.

4.   Mobile missteps can be costly.  The order requires Jamster to automatically provide full refunds to broad categories of consumers who were illegally billed.  What’s more, Jamster has to send texts to other affected consumers with information on how to apply for a refund, and has to work with AT&T and T-Mobile to place notices in people’s mobile bills. On top of that, Jamster will pay $1.2 million to settle the lawsuit. Add it up and it totals trouble for companies that bill people illegally.

5.   Cut out cramming.  The mobile marketplace is booming, but future success depends on transparency and trustworthiness.  Through reports, national roundtables and workshops, and ongoing law enforcement, the FTC’s message couldn’t be clearer: It’s time to drop the hammer on mobile cramming.