TODAY’S PRESENTERS:

Brian Casey – Partner & Co-Chair, Insurance Practice Group at Locke Lord Bissell & Liddell March 9, 2010
Ken Sponsler – Vice President & General Manager, CompliancePoint
Tim Muenchen – Vice President of Business Development, PossibleNOW
Agenda

● Growth and Popularity of Mobile Marketing

● Mobile Marketing and the Insurance Industry

● Compliance considerations
– US Federal and State
– International

● What is SMS (Short Message Service) & MSCM (Mobile Service

Commercial Message)?

● Judicial Case Studies

● Q&A

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 Mobile Marketing Potential

● Of the 306+ million US population over 267 million have mobile

phones:
- More people in US have mobile phone than internet connected PC
- 88% have text messaging capabilities
- 64% have access to the internet through their mobile phone

● Nielsen reports that 23% of mobile subscribers were exposed to

mobile advertising in the last 30 days

● 50% of those users responded to those mobile advertisements

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Mobile Messaging Increasing Popularity

● As of June 2008, over 75 Billion text messages are sent every month
compared to just 18 Billion in December 2006

● Number has grown by 250% each year for the last two years

● SMS is also the only universal mobile platform for the masses

● SMS does not require special downloads as it is already available on over

98% of all cell phones

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 SMS Marketing Statistics

● 75% of the population use Text Messaging

● 80% of Mobile users keep their phone with them all day

● 18-29 year old consumers use text more than voice

● The mobile web marketing channel is projected to make $16

billion by 2011

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Traditional Marketing vs. SMS

● On average 30% of email marketing messages are opened in 12

hours or more

● The Average text marketing messaging is opened 94% of the

time in 9 minutes or less

● Average mail/email response rates are less than 1%

● Average opt-in text marketing response rates are 15-17%

● 3000% greater than direct mail & 750% greater than email

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More Than Just Mobile Phones

● 3rd Screen

● Personal Relationship Devices

● Personal Social Devices

● Consumer Expectation

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Why Mobile?

● It is direct, personal and instantaneous

● Growing user consent

● Tremendous targeting capabilities

● Measurable data

● Killer Response Rates

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Mobile Marketing in the Insurance Industry

● Insurance companies are seeing the benefits and investing in

mobile marketing

● Wide variety of innovative applications

– GEICO
– Progressive
– Nationwide
– USAA
– New York Life
– American Family
– AXA
– Generali France
– Agency solutions

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Mobile Marketing Insurance Applications

1) Promotional Applications
– Introduce new product offerings
– Mobile versions of existing marketing campaigns

2) Service Applications
– Bring immediacy to customer service via claims
– Service alerts
– Policy changes and updates

3) Transactional Applications
– Authorize payments

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Mobile Marketing Insurance Applications

● Request a quote
● Make a payment
● Find an agent
● Access account details – balance and renewals
● View insurance card
● Mobile alerts – due dates, completed transactions, policy expirations
● Report and submit claims information
● View advertisements
● Financial tools – financial calculators, educational info, research data
● Agency tools – appointment reminders, renewal dates, coverage options

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Compliance

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What is the difference between SMS and MSCM?
SMS
● “Short Message Service” is a way to communicate on your mobile phone by
sending and receiving plain text messages. Other terms for SMS include text
messaging, texting, mobile messaging, wireless messaging and short mail.
● Delivery is through the mobile devices telephone number
● Regulated by the FTC’s TSR and the FCC’s TCPA

MSCM
● “Mobile Service Commercial Message” is commercial electronic mail message
that is transmitted directly to a wireless device that is utilized by a subscriber of
a commercial mobile service in connection with such service.
● A commercial message is presumed to be an MSCM if it is sent or directed to
any address containing a reference, whether or not displayed, to an Internet
domain listed on the FCC’s wireless domain names list.
● Regulated by the CANSPAM Act of 2003
SMS and the Telemarketing Sales Rule
The first time the FTC commented on the applicability of the TSR to
wireless devices was in the discussion section of the Statement of Basis
and Purpose dated January 29, 2003.

● “Some commenters asked whether the "do-not-call" requirements would

cover calls to cellular or wireless telephones and pagers. Consumers
are increasingly using cellular telephones in place of regular telephone
service, which is borne out by the dramatic increase in cellular phone
usage.
● The Commission believes that it is particularly important to allow
consumers an option to reduce unwanted telemarketing calls to cellular
telephones or to pagers because some cellular services charge the
consumer for incoming calls, thus adding insult to injury when the
consumer is charged for the unwanted telemarketing call to the
consumer's cellular telephone.”

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SMS and the Telemarketing Sales Rule

● The Telemarketing Sales Rule (TSR) states that “it is an abusive telemarketing
act or practice and a violation of this Rule for a telemarketer to engage in, or for a
seller to cause a telemarketer to engage in, the following conduct: . . . Initiating
any outbound telephone call to a person when . . . that person's telephone
number is on the "do-not-call" registry, maintained by the Commission, of
persons who do not wish to receive outbound telephone calls to induce the
purchase of goods or services.” 16 C.F.R. § 310.4(b)(1)(iii).

● In its Commentary to the TSR, the Federal Trade Commission stated that it
“intends that § 310.4(b)(1)(iii) apply to any call placed to a consumer, whether to
a residential telephone number or to the consumer’s cellular telephone or pager.”
68 Fed. Reg. at 4632 (Jan. 29, 2003).

● Therefore, wireless numbers are included in the federal “do-not-call” list.

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SMS and the Telephone Consumer Protection Act
TCPA states that “no person or entity may:

● (1) Initiate any telephone call (other than a call made for emergency
purposes or made with the prior express consent of the called party)
using an automatic telephone dialing system or an artificial or
prerecorded voice; … (iii) to any telephone number assigned to a paging
service, cellular telephone service, specialized mobile radio service, or
other radio common carrier service, or any service for which the called
party is charged for the call.” 47 C.F.R. § 64.1200(a).

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SMS and the Telephone Consumer Protection Act
The FCC has commented on its standard for express consent,
stating that:

● Persons who knowingly release their phone numbers have in

effect given their invitation or permission to be called at the
number which they have given, absent instructions to the
contrary. Hence, telemarketers will not violate our rules by calling
a number which was provided as one at which the called party
wishes to be reached. However, if a caller's number is "captured"
by a Caller ID or an ANI device without notice to the residential
telephone subscriber, the caller cannot be considered to have
given an invitation or permission to receive autodialer or
prerecorded voice message calls. (7 FCC Rcd 8752, ¶ 31
(1992))

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SMS and the Telephone Consumer Protection Act
The FCC has commented that SMS also applies to these rules:
● We affirm that under the TCPA, it is unlawful to make any call using an
automatic telephone dialing system or an artificial or prerecorded
message to any wireless telephone number. Both the statute and our
rules prohibit these calls, with limited exceptions, "to any telephone
number assigned to a paging service, cellular telephone service,
specialized mobile radio service, or other common carrier service, or
any service for which the called party is charged.“ This encompasses
both voice calls and text calls to wireless numbers including, for
example, short message service (SMS) calls, provided the call is made
to a telephone number assigned to such service.
● SMS, for example, "provides the ability for users to send and receive
text messages to and from mobile handsets with maximum message
length ranging from 120 to 500 characters.” (8 FCC Rcd 14014, ¶ 165
(2003))

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Federal Preemption of State Law
TCPA

● The TCPA sets forth that “. . . nothing in this section or in the

regulations prescribed under this section shall preempt any State
law that imposes more restrictive intrastate requirements or
regulations on, or which prohibits. . .(B) the use of automatic
telephone dialing systems . . . .” 47 U.S.C. § 227(e)(1).

● State law may regulate text messages subject to TCPA

regulation because they may not be preempted by the TCPA.

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US State Laws
● Text messages are banned in California, Louisiana, Ohio, Rhode
Island, and Washington. (express consent may exempt calls)
● Text messages are subject to state “do-not-call” laws in Alaska,
Arkansas, Colorado, North Dakota, Oregon, Texas, Utah, Vermont.
● Messages are not restricted in the following states because those states
do not define “telephone call” in their laws or only apply to voice
communications: Alabama, Arizona, Connecticut, Florida, Georgia,
Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts,
Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska,
Nevada, New Hampshire, New Jersey, New Mexico, North Carolina,
Oklahoma, Pennsylvania, South Carolina, South Dakota,
Tennessee, Virginia, Wisconsin, Wyoming.
● D.C. Delaware, Hawaii, Iowa, Maryland and West Virginia have no
applicable laws
● We expect to see additional mobile marketing laws in the future

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SMS and the Emerging Laws
SMS is an emerging technology that presents compliance challenges

● Whether or not an SMS message is allowable requires a two part

analysis
– Is SMS text allowed to the subscriber’s mobile device?
– Is the number on a Do Not Call list?

● Unanswered questions:
– Many states are silent on SMS or SMS may not fit the definition of a
“telemarketing call”
– Is a “Do Not Text” the same as a “Do Not Call”?
– How long must “Do Not Text” requests be honored?
– What is the grace period allowance for “Do Not Text” requests?
– What state are you really texting into?
– Is “opting in” through short codes the same and “providing your
number”

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SMS and Trade Associations

● Both the Direct Marketing Association and well as the Mobile

Marketing Association require members to only deliver SMS to
consumers who have provided their prior “Opt In” to receiving
them

● We also recommend this course of action to our clients

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 Mobile Service
Commercial Messages

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CANSPAM and MSCM

ALL MSCMs must include:

● A functioning return e-mail address or other Internet-based

mechanism for the purpose of receiving requests to cease the
initiating of MSCM

● Identification of the sender in a form that will allow a subscriber

to reasonably determine that the sender is the authorized entity

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CANSPAM and MSCM
Unless the message is a “transactional or relationship message
express prior authorization of the recipient is required and:

● All requests for express prior authorization must include the

following disclosures:
– That the subscriber is agreeing to receive MSCM sent to his/her
wireless device from a particular sender

– That the subscriber may be charged by his/her wireless provider in

connection with receipt of such messages; and

– That the subscriber may revoke his/her authorization to receive

messages at any time

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CANSPAM and MSCM
● “Mobile service commercial messages” (MSCMs) are allowed
when:
– The person or entity sending the message has the express prior
authorization of the addressee
– The person or entity is forwarding the message to its own address

● The person or entity is forwarding to an address provided that:

– The original sender has not provided any payment, consideration, or
other inducement to that person or entity;
– The message does not advertise or promote a product, service or
Internet website of the person or entity forwarding the message; or
– The address to which the message is sent or directed does not include
a reference to a domain name that has been posted on the FCC’s
wireless domain names list for at lest 30 days, provided that the person
or entity does not knowingly initiate a MSCM.

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CANSPAM and MSCM

Additional Requirements:

● If a recipient of a MSCM requests that the sender cease sending

MCSMs (i.e., “opt out”), the sender must honor this request
within 10 days of the request

● Any option provided to the recipient to “opt out” of future

messages may not result in additional charges to the recipient

● The sender must remain capable of receiving messages or

communication made to the e-mail address or other Internet-
based mechanism provided by the sender as a means of opting
out of future messages for no less than 30 days after transmitting
any MSCM

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FCC Wireless Domain List

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Federal Preemption of State Law
CANSPAM

● The CAN SPAM Act “supersedes any statute, regulation, or rule

of a State or political subdivision of a State that expressly
regulates the use of electronic mail to send commercial
messages, except to the extent that any such statute, regulation,
or rule prohibits falsity or deception in any portion of a
commercial electronic mail message or information attached
thereto”. 15 U.S.C. § 7707(b).

● CAN SPAM and its regulations preempt state law, except for
those state laws regulating deceptive or false advertising.

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International Laws
“work in progress”

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International SMS Laws
● Numerous countries have enacted SMS laws; most require consumer
opt in
● UK, India, Peru, China, Australia have all issued large fines
● Unclear whether countries differentiate between MSCM and SMS
● The European Union (EU) contains 27 member states
● Similar to US Federal/State laws, the EU Directive sets the “floor” for
consumer privacy regulations
● EU members are free to enact more stringent laws

According to the Directive on the Privacy and Electronic Communications

Directive (2002/58/EC):
● Except in case of existing customer relationships (where opt-outs will
prevail), prior consent will be needed before sending unsolicited
commercial email, or "spam," and unsolicited short message service
(SMS) text.

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Canada’s SMS laws

● The National DNCL only applies to telecommunications calls

● This means any unsolicited telecommunications call that is made

to a landline, wireless, fax, VoIP or satellite telephone number

● SMS text messaging is not included, as it is not considered a

telecommunications call

● However, a “common shortcode” initiative was began in 2008 to

address the increasingly popular use of shortcodes

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Judicial Case Studies

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 FCC TCPA - Autodialer Rule

● “Automatic Telephone Dialing System” (ATDS) = equipment

with capacity to (1) store or produce telephone numbers, using a
random or sequential number generator, and (2) to dial such
numbers

● TCPA prohibits using ATDS to cell number or other service for

which called party is charged (not limited to telemarketing calls),
except with prior express consent of called person

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 Recent Key TCPA / ATDS Cases

● Satterfield v. Simon & Schuster (N.D. California 2007)

– Plaintiff contended that Defendant violated TCPA when her

minor son received promotional text message after she agreed
to receive promotional texts when she purchased a ring tone
from Nextones, an affiliated brand of the defendant

– Defendant argued no violation of TCPA as no ATDS was used

and prior consent was granted.

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Recent Key TCPA / ATDS Cases

● Satterfield v. Simon & Schuster (N.D. California 2007)

– “Yes! I would like to receive promotions from Nextones

affiliates and brands. Please note, that by declining you may
not be eligible for our FREE content.”

– “By clicking Submit, you accept that you have read and agreed
to the Terms and Conditions.” The Terms and Conditions
state that Nextones and its affiliates may use a user’s mobile
phone number in connection with any text message offering or
other campaign.”

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Recent Key TCPA / ATDS Cases

● Satterfield v. Simon & Schuster (N.D. California 2007)

– Court determined that there was no violation of the TCPA

because (1) the equipment used to send text messages was
not an “automatic telephone dialing system” and (2) Plaintiff
consented to receipt of text messages.

– Summary Judgment in favor of Defendant

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Recent Key TCPA / ATDS Cases

● Satterfield v. Simon & Schuster (9th Cir. 2009)

– Reversed grant of summary judgment

– Material question of fact whether the dialing system at issue

had the “capacity” to store or produce randomly or
sequentially generated numbers and to dial them; issue was
not whether the system actually randomly or sequentially
stored or produced the numbers

– Text Message = a Call

– No consent as Simon & Schuster not an affiliate of Nextones

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Recent Key TCPA / ATDS Cases

● Abbas v. Selling Source, (N.D. IL, December 2009)

– Plaintiff sued under TCPA claiming Defendant sent unsolicited

Short Message Service (SMS) text messages using an ATDS

– Defendant moved to dismiss on grounds that:

• Plaintiff failed to allege that he was charged for SMS messages sent
• Plaintiff failed to allege that an ATDS was used
• SMS message is not a “call” under TCPA

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Recent Key TCPA / ATDS Cases

● Abbas v. Selling Source, (N.D. IL, December 2009)

– TCPA prohibits certain calls made “to any telephone number

assigned to a paging service, cellular telephone service,
specialized mobile radio service, or other radio common
carrier service, or any service for which the called party is
charged for the call.”

– First issue was whether the phrase regarding “service for

which called party is charged” modifies all preceding clauses
and the application of the “doctrine of last antecedent”

– Court held that TCPA does not require that a called party be
charged for the call for ATDS rule to apply

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 Recent Key TCPA / ATDS Cases

● Abbas v. Selling Source, (N.D. IL, December 2009)

– Second issue was whether Defendant used an ATDS

– Court inferred that Defendant used equipment that had some

automated capacity

– Court relied on Satterfield and found that only an allegation of

capacity is required and proof of actual use of that capacity is
not required

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Recent Key TCPA / ATDS Cases

● Abbas v. Selling Source, (N.D. IL, December 2009)

– Third issue was whether SMS message is a “call” within the

meaning of TCPA

– Defendant argued that SMS messages were not calls because

they did not exist in 1991 when TCPA was passed, proposed
amendments expressly to include SMS messages under TCPA
and CAN-SPAM Act applies to SMS messages

– Court found that “call” was ambiguous and including SMS

messages is consistent with purposes of TCPA

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 Recent Key TCPA / ATDS Cases

● Pollock v. Island Arbitration & Mediation, (City Ct. N.Y. ,

November 2008)

– First, note this is a state small claims court decision with pro
se plaintiff

– Defendant sent fax communications to plaintiff’s cell phone,

which had a number that had been the fax number of
defendant’s former customer and was reassigned to plaintiff

– Plaintiff contacted defendant to request cessation of calls but

would not give his number

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Recent Key TCPA / ATDS Cases

● Pollock v. Island Arbitration & Mediation, (City Ct. N.Y. ,

November 2008)

Court found:
– Transmission was a call for purposes of TCPA

– TCPA’s prohibition on sending unsolicited faxes not at issue

because of failure of transmission but ATDS’ cell phone
provision applied

– No ATDS used because defendant simply sent calls off a list

and there no was no use of equipment that randomly or
sequentially generated phone numbers

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Federal Legislative Proposals

● Stop M-Spam Abuse as a Sales Industry Habit Act of 2009 a/k/a

SMASH Act of 2009 – H.R. 1391

● Would require FTC to amend its Telemarketing Sales Rule

explicitly to prohibit sending an electronic commercial message
containing an unsolicited advertisement to a phone number
assigned to a commercial mobile service which is on the DNC
list

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Conclusions

● Mobile Marketing is experiencing explosive growth

● Insurance carriers have released a wide variety of applications

● Response rates can be impressive

● But, not without risks… compliance and legal considerations

● Need to determine which applications are best suited for your

business

● Focus on opt-in and consent for mobile campaigns

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Questions?

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Contact Information

Brian Casey – Partner at Locke Lord Bissell & Liddell LLP

Phone: (404) 870-4638
E-mail: bcasey@lockelord.com

Ken Sponsler, CIPP, PMP – Vice President and General Manager at CompliancePoint
Phone: (770) 255-1094
E-mail: ksponsler@compliancepoint.com

Tim Muenchen – Vice President of Business Development at PossibleNOW, Inc.

Phone: (770) 255-1020
E-mail: tmuenchen@possiblenow.com

www.lockelord.com
www.compliancepoint.com
www.possiblenow.com

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