The Federal Trade Commission ensures the safety of consumers and businesses. Its mission is to protect consumers and competition by preventing anticompetitive, deceptive, and unfair business practices through law enforcement, advocacy, and education without unduly burdening legitimate business activity (“About the Federal Trade Commission,” 2019). Among the multiple things that the FTC watches, we can find the “mobile cramming.” But what is this? Mobile cramming is a modern version of a long-time scam in which consumers’ phone bills are used as a vehicle for unauthorized charges placed by third parties (“Mobile Cramming,” 2019).
There is a well-known case about mobile cramming. It is the AT&T case. In this case, more than 2.7 million AT&T customers had third-party charges added to their mobile bills without their consent. So, the mobile marketing law that was violated in the AT&T case is mobile cramming.
The negative consequences to the consumer, as it was explained, was that they forced to pay extra charges on their bills and their privacy was violated.
The Federal Trade Commission put severe penalties to companies for violating legal considerations. In the case of AT&T, this company needed to pay many millions of dollars in penalties. The Federal Trade Commission provided over $88 million in refunds to more than 2.7 million AT&T customers. Some people received credit on their bill, and others received a check. This case was well-known since it involved the 50 states and the district of Columbia. AT&T agreed to pay $80 million for refunds and notify current customers who were billed for unauthorized third-party charges of the refund program. Under the settlement, the company also significantly changed its process for third-party billing (“FTC Providing Over $88 Million in Refunds to AT&T Customers,” 2016).
A marketer needs to be careful when doing a mobile marketing campaign. To remain ethical, he or she must make sure that the campaign does not break a law or regulation of the FTC or any state law. Similarly, a marketer needs to know that companies can’t make a series of charges to consumers without notifying them knowing why they are being charged. People should be able to decide whether or not they want to add an extra charge to their mobile phones. It is necessary to add privacy statements, and statements of different actions so customers can accept or decline any service with a full understanding of it. It is necessary to be transparent with customers so as not to have problems with them, not to compromise the reputation of the company and not have to pay multi-million dollar penalties. This case left a great lesson to AT&T and other companies to avoid making the same mistake.
References
About the Federal Trade Commission (2019). Retrieved from: https://www.ftc.gov/about-ftc
FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming (2016). Federal Trade Commission. Retrieved from: https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were
Mobile Cramming (2019). Federal Trade Commission. Retrieved from: https://www.ftc.gov/news-events/media-resources/mobile-technology/mobile-cramming
EK Marketing Blog by Ericka Koehler 