Groups Call on FTC to Develop Consumer Safeguards for Mobile Web Commerce

The Center for Digital Democracy and the U.S. Public Interest
Research Group (USPIRG) announced today that they intend to amend their
2006 complaint on interactive marketing techniques and threats to
consumer privacy to include newly emerging mobile marketing practices.
The announcement was made as part of the testimony given today by Jeff
Chester, executive director, Center for Digital Democracy (CDD), at the
Federal Trade Commission’s “Beyond Voice: Mapping the Mobile
Marketplace,” a two-day “Town Hall” meeting. Chester spoke on the
“Mobile Advertising and Marketing” panel. CDD and USPIRG’s November
2006 complaint directly led to the FTC’s current inquiry into online
advertising and privacy, contributing to the release of proposed
consumer protection principles for online marketing issued last
December.

“The ‘mobile marketing ecosystem,’ as the industry terms it, poses
new threats to consumers,” explained Chester. “Many of the same
practices that have raised concern about online privacy–including
profiling and behavioral targeting–are being migrated over to what is
called the ‘mobile web.’” Chester called on the FTC to take leadership
in ensuring that the interests of consumers are reflected in how the
mobile marketplace structures its applications and data collection
techniques. “The FTC dropped the ball when it came to proactively
addressing threats to privacy from the online advertising in the
personal computer marketplace. Luckily for consumers, we are still in a
fluid period for mobile marketing, where the commission–if it takes
action–can help ensure both the public and the mobile industry are each
well served.”

In the upcoming amended complaint, the marketing-oriented
technologies that are helping shape the mobile platform will be
addressed. It will discuss, for example, the implications of the
so-called “Personalization Engine” from Enpocket, which describes it as
a system of analytical models that scores mobile users based on their
past behavior. It enables us to predict which products and services a
customer might purchase next. That way, we can provide the right
message, advertisement or promotion to the right person at the right
time. It can also forecast events, such as customer churn and will
recommend effective customer engagements to preempt attrition. When
integrated with the Marketing Engine, the result is highly relevant
marketing messages, personalized recommendations, less churn, and
higher sales of mobile consumables.

Other companies have developed “multi-layered” and “precise
targeting” for mobile advertising, which includes such data as “gender,
age, language, income, and education; country, state, zip/postal code
and GPS coordinates; behaviors, interests and tastes; the context of
voicemail and text messages.”

The FTC must pay special attention to the privacy and consumer
protection needs of children and adolescents, noted Chester. “Young
people have, as we know, embraced this new medium most dramatically,”
he explained. “Text messaging has replaced emails as the communications
method of choice for many ‘tweens’ and teens.” The commission should
also proactively address how other groups may be at risk because of new
mobile marketing practices, he added. For example, younger Hispanics in
the U.S. have embraced mobile communications, with marketers reporting
that nearly 71 percent of English-speaking Hispanics are “engaged” in
consuming mobile content. Hispanics “are ahead of the general market on
mobile data use,” noted one trade publication and “are the No. 1
consumers on a lot of the various segments related to the mobile phone
and, in text, they absolutely lead the way.” The higher percentage of
youth in the overall Hispanic population in the U.S. is one reason why
mobile adoption is so strong.

“Mobile services will increasingly be an essential form of
communications, including access to news, civic affairs, friends and
family, entertainment and commerce,” explained Chester. “Mobile
marketers–out of view from most policymakers and consumers–are creating
what the rules of the mobile web experience will be for the public.
Consumers need to be part of the mobile web equation, not as passive
recipients of advertising and services, but as co-creators of how this
new marketplace should be structured,” said Chester.

Links to the 2006 and 2007 FTC complaints can be found at:
http://democraticmedia.org/news_room/press_release/FTCSupplementalFiling

The Center for Digital Democracy (www.democraticmedia.org) is a
Washington-based nonprofit organization dedicated to maintaining the
diversity and openness of the media, focusing especially on the new
broadband communications systems. CDD’s executive director played a
leading role in the passage of the federal Children’s Online Privacy
Protection Act of 1998.

U.S. Public Interest Research Group serves as the federation of
state PIRGs, which are non-profit, non-partisan public interest
advocacy organizations that take on powerful interests on behalf of the
American public. (www.uspirg.org).