Consumers are increasingly expressing frustration at the growing number of advertisements, junk mail and fraudulent schemes that they are receiving via short message service text messages to their cellular phones. This frustration arises from the sense of encroachment on the consumers’ privacy as well as the cost associated with receiving unsolicited text messages. Unlike unsolicited e-mail messages, which are a nuisance but are otherwise free to the recipient, unsolicited text messages can cost a consumer. In fact, both AT&T/Cingular and Alltel Wireless charge fifteen cents for incoming messages while Verizon Wireless and Sprint charge twenty cents for incoming messages.

This means that consumers are paying to receive unsolicited advertisements which can be costly considering the number of messages that are being distributed. Current estimates demonstrate that over 1.5 billion spam text messages (an increase of 700 million messages since 2006) will be received by consumers in 2008 at a cost exceeding $225 million dollars. These numbers have led both federal and state governments and consumers to take action to curtail companies from sending unsolicited text messages.

In late 2003, Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (CAN-SPAM Act) to slow the use of e-mail as a means of unsolicited advertising by providing penalties for persons that violate the Act. While the CAN-SPAM Act allows entities to send advertisements via text message to consumers who have requested the service, § 14 of CAN-SPAM Act and its implementing rules specifically ban companies from sending unsolicited commercial text messages to cellular phones.

The CAN-SPAM Act also gives consumers the ability to contact the Federal Trade Commission and initiate a complaint if unsolicited text messages have been received. This complaint could lead to an investigation by the FTC. Similarly, some states have enacted specific bans on the sending of unsolicited commercial text messages. California, for instance, has banned the sending of such messages unless the consumer has a preexisting relationship with the sender.

Advertisers and cellular service providers may also be subject to proceedings and penalties before both state regulatory agencies and federal courts. For instance, in 2005, the Utility Consumers’ Action Network (UCAN) filed a complaint against Sprint PCS with the California Public Utilities Commission. UCAN alleged that Sprint PCS had sent text messages to its customers advertising its services. This resulted in the Sprint PCS customers being charged for the delivery of the text messages. Sprint PCS and UCAN entered into a settlement agreement where Sprint PCS agreed to identify and credit the accounts of customers who had been charged as well as to no longer charge customers for advertisements sent via text message.

Further, in 2006, a group of consumers filed a class action lawsuit against Distributive Networks LLC for sending text message advertisements for Astro-Mobo, Daily Pop Gossip, and Mad Love Tips. A federal court in Chicago approved a settlement in early 2007 that provided a payout of approximately $150.00 to affected consumers. Finally, in late 2007, AT&T/Cingular sued a number of advertisers for sending unsolicited text messages to customers. The case was resolved by the entry of a permanent consent injunction forbidding the defendants from sending future unsolicited commercial text messages.

Both government leaders and consumers are now taking an active role in curtailing the use of unsolicited text messages to advertise legitimate products and to deceive consumers into divulging personal information. Based on the heightened scrutiny, it is prudent to seek legal counsel before engaging in any advertising via text messaging.

For more information, please contact

Anthony V. Lupo
lupo.anthony@arentfox.com
202.857.6353

Sarah L. Bruno
bruno.sarah@arentfox.com
202.775.5760

Matthew R. Mills
mills.matthew@arentfox.com
202.715.8582