Consumers Should Be Safeguarded in WAP Commerce, Says Watchdog Groups

By Editor Wireless and Mobile News on May 7, 2008 3:09 PM | Permalink | Comments (0) | TrackBacks (0)

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.

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.

“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.”

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/newsroom/pressrelease/FTCSupplementalFiling