Thursday, November 22, 2012

The Legal Infrastructure of Business: Papa Johns: Better Ingredients ...

Pizza chain Papa John's is facing a $250 million class-action lawsuit for allegedly spamming customers with hundreds of thousands of illegal text messages.?The?lawsuit, filed in the U.S. District Court in Seattle on Monday, contends that Papa John's violated state and federal law by sending out 500,000 unwanted text messages advertising the chain's products in early 2010. The messages, blasted out to customers through mass texting service OnTime4U, offered deals on Papa John's pizza.


The Law

The federal Telephone Consumer Protection Act (TCPA) of 1991 bars companies from sending text message advertisements to customers that have not specifically opted into the service.?In response, the Federal Communications Commission (FCC) also adopted rules that require anyone making a telephone solicitation call to your home to provide his or her name, the name of the person or entity on whose behalf the call is being made, and a telephone number or address at which that person or entity can be contacted. The original rules also prohibit telephone solicitation calls to your home before 8 am or after 9 pm, and require telemarketers to comply with any do-not-call request you make directly to the caller during a solicitation call. The TCPA's constitutionality was challenged by telemarketers soon after it was enacted.?Later, two cases effectively settled this issue and the TCPA was found to be constitutional.



In 2005, plaintiff Rodney Joffe sued Acacia Mortgage Corporation for sending unsolicited SMS messaging to his cell phone. This case successfully argued that the TCPA (Telephone Consumer Protection Act) applies here, that unsolicited SMS messaging is using an "automatic dialing system" to make a "call" to a "telephone number assigned to a cellular telephone service."


Is it the end of mobile marketing?

With the number of mobile devices on the rise, it becomes imperative to respect consumer choice to not receive marketing messages.?What?s more, unlike with email spam, where a junk folder exists and many filters are put into place to ensure that we never even see most of the spam that is sent to our addresses, mobile device users don?t know how to go about managing this issue.?Companies need to understand that by bombarding consumers with deals, they might be alienating a lot of its consumers.?This practice is not only a slap to the face to the Mobile Marketing Association?s best practices, it?s quickly eroding the benefits of SMS marketing, including high redemption rates and even higher open rates. These metrics have an inverse relationship to the rate of SMS SPAM, and by continuing to allow businesses to import customer phone numbers, SMS SPAM will most certainly rise, pushing down SMS redemptions and open rates. This is the same reason why email marketing has a really low open rate (less than 2%)?


Similar concerns were addressed regarding email spamming by the CAN-SPAM Act, a law that sets the rules for commercial email, establishes requirements for commercial messages, gives recipients the right to have you stop emailing them, and spells out tough penalties for violations.


Is this enough to stop the spammers?

If a business decides to use spam text message it is first important that they know it is illegal. Perhaps if the companies that sold the spamming technology to other businesses were required to educate the receiving company of the law before retention of the technology then the frequency would drop.? If this education does not work then there is technology available to attempt to filter the spam much as email gets filtered. While this technology is not as perfect as email, most cell phone carriers have options for consumers to attempt to filter some of the spam.? Improving this technology would indeed help consumers with the annoyance of text message spamming.


However, these improvements in technology and laws are reducing the efficacy of text message marketing.? As mentioned above the open rate will continue to decrease as cell phones users become more aware of the practices.? At that point, hopefully, cell phone spam will be something consumers learn to live with and don?t have to look at just like email spam today.



Dhiraj Khandelwal

Jennifer Sagan,2817,2412119,00.asp



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