FTC Takes Aim at Text Spammers, Issues Mobile Payment Report (March 11, 2013)
March 11, 2013
The Federal Trade Commission is setting its sights on the mobile sector. Late last week, the agency filed a series of lawsuits against accused senders of mobile marketing spam and released a report on mobile payments expressing concern over privacy, security and billing issues.
The FTC filed eight complaints in courts around the country against a total of 29 entities it says are responsible for sending more than 180 million spam text messages falsely advertising free gift cards to major retailers, including Best Buy, Target and Walmart, along with free iPhones and iPads, to collect personal data in the Web that was eventually sold to third parties for marketing efforts. The FTC complaints targeted defendants who sent the unwanted text messages, as well as the operators of the Websites to which the text recipients were directed. The complaints call for restraining orders that would prevent the defendants from continuing their alleged deceptive practices and remuneration for consumers who were duped into paying money for the allegedly free gifts or were charged for receiving the unwanted texts.
Also last week, the FTC released a report on the rapidly growing mobile payment industry, issued in part as a follow-up to a workshop the commission held in April 2012 examining mobile payments. The report cited the resolution process in cases of fraudulent billing or unauthorized charges as “one of the most significant concerns for users of mobile payments.” Depending on the funding source linked to the payments—e.g., credit, debit, prepaid card or direct carrier billing—the consumer “may or may not have statutory protections regarding unauthorized charges.” The report cited credit and debit cards as offering the strongest protections, with prepaid cards affording weaker protections. Direct carrier billing, the report said, offers essentially no statutory protection, with customers having to rely totally on the terms of their mobile carrier agreements or their provider’s good will in cases of fraudulent charges.