AT&T violated “Section 5(a) of the FTC Act, which prohibits unfair or deceptive acts of practices in or affecting commerce,” also known as a tactic called mobile cramming. Mobile cramming is a tactic using third party charges that are added to customers bills without their consent. AT&T masked these charges as “ringtones and text message subscriptions containing love tips, horoscopes, and ‘fun facts’” at a price of $9.99 a month and AT&T pocketed at least 35% of the imposed customers.
The negative consequences to the consumers are the feeling of being taken advantage of and being stolen from. While also possibly loosing trust in the company, which could spill into be hesitant about any other future companies they might be considering to do business with. However, AT&T might have “saved” themselves by sending out refund checks to people when the problem was revealed and brought to light.
Depending on the size of the company that has violated mobile marketing laws, it could end in bankruptcy for the company. Companies like Apple, Sony, and LinkedIn have all suffered from legal issues involving the privacy of people’s information. However, with companies that large, the cases are often dismissed and are just left with a huge legal cost to just defend themselves. Where as if a smaller business would have to defend themselves and possibly not have their case dismissed, this could be detrimental to their company and possibly fatal.
Steps that companies can take in a mobile marketing campaign to remain ethical are being transparent with their customers, keeping customers information private and secure, and giving customers the choice to opt in and out of their SMS marketing or email newsletters. These small, but very important steps will help consumers trust your company as well as preventing any legal issues.
FTC Providing Over $88 Million in Refunds to AT&T Customers Who Were Subjected to Mobile Cramming. (2019, May 23). Retrieved December 8, 2019, from https://www.ftc.gov/news-events/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were.
Roesler, P. (n.d.). Three Legal Issues to Keep in Mind with Mobile Marketing. Retrieved December 8, 2019, from https://www.webmarketingpros.com/three-legal-issues-to-keep-in-mind-with-mobile-marketing/.