$90M Awarded In SMS Spam Case, Best Practices Anyone?

Rules, regulations and industry best practices are put in place for a reason, and nowhere are they more important then when it comes to anti-SPAM cases.  An emerging number of cases are being filed for violations of anti-SPAM laws regarding not only landline and cellphone call violations, but for SMS SPAM as well. One such …   Read More

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Rules, regulations and industry best practices are put in place for a reason, and nowhere are they more important then when it comes to anti-SPAM cases.  An emerging number of cases are being filed for violations of anti-SPAM laws regarding not only landline and cellphone call violations, but for SMS SPAM as well.

One such case is one involving a woman by the name of Laci Satterfield who, in 2007, sued Simon & Schuster in federal court in the Northern District of California for sending an unsolicited text message to her son’s cell phone that advertised the Stephen King horror book Cell.  Her attorneys claimed such text messages violated the Telephone Consumer Protection Act because they were sent through an automatic telephone dialing system. The suit, brought on behalf of a potential class of 60,000 people, sought between $500 and $1,500 for each unsolicited text message Simon & Schuster sent, meaning the publisher faced damages of up to $90 million.

While specific rules and regulations regarding SMS messages are still a bit ambiguous, Simon & Schuster claimed that it didn’t use an auto-dial system, and that no “calls” took place as defined by the federal law.  The company also claimed that Satterfield and other users had given consent by agreeing to the terms of ringtone downloads, and thus had opted-in to receiving further marketing messages.  Originally, Oakland federal district court judge Claudia Wilken sided with Simon & Schuster, though she did not rule on the question of whether a text message constitutes a telephone call- the most important aspect of the case.

On Friday, however, the Fifth Circuit reversed that original decision. The appellate court found that Judge Wilken erred when she ruled that no genuine and disputed issue existed regarding Simon & Schuster’s alleged use of an auto-dial system. The appellate panel also ruled that a text could be considered a call under Federal Communications Commission regulations.  It also held that, contrary to Simon & Schuster’s claim, Satterfield and others in the class did not give their permission to receive an unsolicited text message.  The case is now on remand.

This represents a large victory in regards to other similar cases that have more or less hinged on the outcome of this particular case and whether or not an SMS message can be regulated under the FCC like phone calls can.  While regulation is still evolving for this sort of thing, best practices were still very much violated, and completely overlooked by Simon & Schuster.  In other words, they should’ve known better.

Smaller companies and service-providers maintain strict guidelines when it comes to SMS messages, given the nature of the marketing tactic and the way they’re pushed to consumer’s mobile devices.  Larger companies and corporations, such as Simon & Schuster, have an even larger responsibility to adhere to not only the rules that are already put in place, but also the industry best practices that are more or less an unspoken set of regulations that everyone using the technology must abide by.

SMS-based marketing can be very successful when done properly, but this goes to show you that even the largest of corporations can be reprimanded for not keeping up with the best practices surrounding the technology they’re using, and violating the most simplest of rules- consumer privacy and consent.

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  1. YeeZ Mobile

    It is crazy what is happening over seas with SMS Spamming. lets not let that happen in the USA!

  2. Asset Protection Plan

    Great post.This is so true. I’ll put you on my bookmark. And also, I’ll let my friends read this. This is an interesting fact that we all should know. Thanks.

  3. Robert

    I currently pay $0.50 per text message received. I don’t need a plan because I receive messages rarely. For $0.50 a piece, I do want to receive personal messages, but not unsolicited spam.

    Sometimes the number of spams I receive push my messaging close to, or even over, the cost of a monthly flat rate.

    The pressure to force me to pay a monthly rate to reduce my liability to unsolicited spam drives me ever closer to a shooting rampage.

    I think $90 million is a great punitive disincentive to bothering people trying to go about their personal business.

    In all fairness, the best solution to this would be to stop free access to spammers. Make them shoulder the entire cost of each spam message; passing the cost onto the victims is stupid.

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  8. Chris

    This makes us wonder where it can stop… if a computer linked to a carrier is now an “auto dialer”, what does that make the 250m cell phones also connected? These phones are nearly computers and more than capable of abusing the system.

    Furthermore, how do the current best practices help us? There is nothing to cover brands from auto dialer law suits. The guidelines go to almost extreme lengths to cater for end users, but ignore all the potential legal issues affecting brands. We can’t be the only company getting complaints that the HELP command is misleading, giving out service provider info and not stuff like opening times, directions or other stuff that is actually useful for the texter!

    The defense of these accusations needs to rest with our industry associations, eg the MMA & CTIA. Why should we expect brands to foot legal defense bills in these test cases? It’s our industry at stake, which as soon as a case sets legal precedence either through a genuine case win or a simple screw up, then all companies using mobile marketing, regardless of the service is liable for a class action suit.

  9. Amy

    I think some people are missing the point about opt-in, best practices, etc. The court has interpreted the TCPA so that any computer that sends texts is considered an auto dialer simply because a computer has the *capability to generate a random list of numbers. It doesn’t matter that your opt-in list isn’t random at all. The interpretation rests on the issue of capability. This is – depending on your perspective – tenuous or absurd – but the fact remains that the court remanded this case to the district court for further litigation b/c they did not agree that a computer sending texts (opt in or not regardless of best MMA practices which are irrelevant to the law) was not an autodialer. If this interpretation stands anyone who sends out a mobile marketing campaign will be in violation of the TCPA.

  10. Josh

    As the previous poster stated, MMA best practices are just that, best practices…they are not the law, and they don’t really get to the heart of the problem with this decision.

    If texts sent out for a campaign are equated to phone calls made using an auto-dialer, MMA best practices aren’t going to protect mobile marketers from a barrage of frivolous lawsuits…and that is why this ruling is serious trouble.

  11. Cal Morton

    You ‘HOPE’? Of course it will, it already has. No matter that it’s a ‘no-brainer’, companies/ brands don’t HAVE to do mobile, or rather SMS, as this seems to be the toxic asset of mobile marketing.

    No they didn’t follow ‘best practice’ guidelines which would have required the content provider (Simon & Shuster) to be identified at the front of the message and the opt out language… considering the campaign, doing so would have killed the fun and mystery aspect.

    However they didn’t use an auto-dialer, they used a list of folks who, they maintain, consented to receiving marketing messages via electronic communication, including SMS, from third-parties.

    While I’m not a fan of third party lists etc, if consent was given, and an auto-dialer wasn’t used, no ‘law’ was broken, just guidelines that weren’t followed.

    $90 Million!?, who gets that, who benefits here, who was actually, or even theoretically, harmed…

    SMS is already not seen as ‘sexy’ enough by agencies, and after all how much can you charge a client for 160 characters w/ spaces, lawsuits like this is just another reason fro them to skip SMS altogether in favor of a ‘widget’ or an app etc.

    The role of text messaging in MobileMarketing…from short codes anyway as the carriers seem incapable of cutting off the real source of SPAM SMS, their own SMTP gateway, is being strangled just as it was finding friends in high places.

    Of course, this is only in the U.S., everywhere else is great, just as it was 7 years ago when we got started in the UK. These lawsuits are embarrassing, and they are typical… these are just the kind of lawsuits that business people all over the world cite as their #1 concern when they talk about expanding to the U.S.

    I repeat, who has been harmed and who is benefiting?

  12. Jared Reitzin

    Great article Justin. I hope this doesn’t scare mobile marketing away from larger companies. There is absolutely no risk in mobile marketing if best practices are followed and done right. Notice how subscribers wanted ring tone, but not text messages about horror book releases? You have to manage your subscribers expectations and tell them exactly what they are to expect.

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