On April 22, 2009, the Federal Trade Commission (FTC) issued a report on recent and upcoming developments in the mobile commerce market, summarizing discussions from nine public town hall sessions on topics ranging from mobile security and location-based services to best practices for billing, complaints, and customer dispute resolution. Although the report generally praised the innovation by participants in the mobile marketplace, the FTC noted three areas of potential concern and future regulation: 1) cost disclosures for mobile services, 2) unwanted or harmful mobile text messages, and 3) privacy challenges related to children’s use of smartphones to access the mobile web.
The FTC also announced a plan to expedite its review of the Children’s Online Privacy Protection Rule to 2010, rather than 2015 as originally planned. In light of the FTC’s report, mobile service providers, equipment manufacturers, and application developers should review their policies to ensure compliance with industry best practices and should continue to monitor regulatory and legislative developments at both the state and federal levels.
The Current Mobile Marketplace
As discussed in the report, mobile commerce (M-commerce) continues to evolve. The FTC cited virtually unanimous predictions of continued growth in the use of mobile services, as prices drop, bandwidth and Internet access speeds increase, and consumers increasingly adapt to non-voice services from smartphones. The report also noted that the potential explosion of commercial uses of mobile devices—including mobile marketing and advertising—may require greater consumer privacy protections.
Areas of FTC Concern
Billing and Customer Service. The report identified industry-wide problems in the areas of consumer billing, disclosures, complaint handling, and dispute resolution. Though representatives at the town hall sessions outlined best practices in the areas of mobile services and M-commerce, the FTC noted that these procedures remain opaque to consumers. The FTC also commented in the report that industry guidelines should be publicized better and reviewed frequently to ensure adequate consumer protection.
Unwanted or Malicious Text Messages. The FTC affirmed that it will continue to partner with law enforcement officials to track the impact of unwanted mobile text messages, malware, and spyware on consumers. Mobile device users share responsibility with carriers, manufacturers, and software providers for the security of their handsets. However, many consumers disregard warnings about mitigating security risks, and the number of viruses, spammers, and data thieves continues to increase. Both the FTC and town hall participants acknowledged a particular need to educate consumers better about the privacy risks posed by third-party applications.
Children’s Use of Mobile Devices. The FTC stated that mobile service providers may need to increase their outreach and awareness efforts related to optional controls and functionality on mobile devices, especially for features relevant to parents. The report discussed several techniques to limit the ability of children—especially those who lack the capacity to distinguish content from commercials—to incur costs related to mobile purchases. The report also praised a recent industry initiative to educate parents about safety issues such as cyber-bullying. In addition, the town hall participants discussed technological ways to limit mobile phone-related disruptions in classroom settings while preserving the interest of parents to maintain potential contact with their children at all times.
The range of topics discussed and stakeholders involved in the FTC’s report on the mobile marketplace indicate that the agency will continue to monitor consumer protection in the mobile marketplace. Moreover, as this sphere evolves and mobile devices become integrated further into consumers’ lives, consumer groups are likely to seek increased regulation of mobile devices and applications. As a result, companies offering mobile products and solutions should continue to monitor regulatory and legislative developments in this area, while at the same time developing and complying with industry best practices.