The FTC vs AT&T: Illegal Practices in Mobile Marketing

In the 2016 AT&T case, over 2.7 million customers’ rights were violated- specifically section 5 of the Federal Trade Commission Act. This act prohibits deceptive or unfair practices in or affecting commerce (Federal…1914). AT&T violated this law by participating in mobile cramming (adding third-party charges to mobile bills without consent). The negative consequence for the consumer was that they were paying extra money for services without their knowledge. Applications that check your inbox to find subscription services are gaining popularity every day because of companies’ increasing ability to disguise or hide their charges. Unknowingly signing people up for services is unethical and could even be considered cruel; a lot of people don’t know how to find their subscriptions or how to cancel them. The consequences for AT&T, in this case, were that they had to pay $80 million in reimbursement and notify each of the customers of their error; although, UDAP violations can carry notable legal, reputational, and compliance risks (Federal…1914) (Katz, 2021).

A case similar to AT&T’s is the 2012 case against Amazon and Publisher’s Clearing House in which the company caused millions of users to enroll in the Amazon Prime subscription service unknowingly using dark patterns. They then went further by making the subscriptions nearly impossible to cancel, leaving customers feeling frustrated and trapped. The complicated cancellation process required users to navigate through four pages, six clicks, and fifteen options (Gorman et al., 2023).

Marketers must be extremely thorough in their mobile marketing campaigns so they do not violate any laws. Some of these laws include requiring written consent for text messages and protecting consumers from an overhaul of messages (CM.com, 2023). There are also laws designed to protect children from receiving certain types of advertisements, and laws designed to enforce consent and protection of location-based services. The terms of any service must be clearly defined, unlike the ones given in the cases above (Socolow, 2010). These laws are imperative to keep in mind and follow when running any mobile marketing campaign to achieve success, avoid legal trouble, and stray from unethical practices.

CM.com. (2023). The complete U.S. Mobile Marketing Compliance Guide. Retrieved from https://www.cm.com/en-us/blog/guide-to-mobile-marketing-compliance-in-the-us/

Federal Trade Commission act section 5: Unfair or … (1914). Retrieved from https://www.federalreserve.gov/boarddocs/supmanual/cch/200806/ftca.pdf

Gorman, F., Chapin, B., Jacob, R., & May, J. M. (2023). FTC targets “dark patterns” in actions against Amazon and Publishers Clearing House. Retrieved from https://www.wilmerhale.com/insights/client-alerts/20230814-ftc-targets-dark-patterns-in-actions-against-amazon-and-publishers-clearing-house

Katz, M. (2021). FTC providing over $88 million in refunds to AT&T customers who were subjected to mobile cramming. Retrieved from https://www.ftc.gov/news-events/news/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were-subjected-mobile-cramming

Socolow, B. (2010). Mobile Marketing – Legal Do’s & don’ts. Retrieved from https://www.loeb.com/en/insights/publications/2010/04/mobile-marketing–legal-dos–donts