When Good SMS Messages Go Bad - Satterfield v. Simon & Schuster revisited

As more and more companies turn to mobile marketing, it is important to keep abreast of the legal issues that marketing firms must subscribe to.  In the ever changing world of mobile marketing, no case has more immediate impact than that of Satterfield v. Simon & Schuster.  Here’s a quick recap of events to date:

In late 2005 or early 2006, Laci Satterfield became a registered user of Nextones.com (“Nextones”) in order to receive a free ringtone for her seven year old son.  In order to receive the ringtone, Laci had to check a box next to a statement that read:

Yes! I would like to receive promotions from Nextones affiliates and brands. Please note, that by declining you may not be eligible for our FREE content. By checking Submit, you agree that you have read and agreed to the Terms and Conditions.

In January of 2006, Laci Satterfield received the following SMS message on her son’s phone:

The next call you take may be your . . . Join the Stephen King VIP Mobile Club at http://www.cellthebook.com RplyS.TOP2OptOut. PwdByNexton.”

In June of 2007, Satterfield filed a federal class action law suit against Simon & Schuster, alleging a violation of the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. § 227, for an unsolicited text message to her and other class members’ cell phones, by an Automatic Telephone Dialing System (“ATDS”).  Simon & Schuster defended themselves on two fronts.  First, they claimed that by definition of the TCPA, the SMS message was not a phone call, nor was the software used to create the SMS message an ATDS.  Second they claimed that the SMS message was not unsolicited, as Satterfield opted to receive promotions from Nextones.

For some background, the TCPA states that:

It shall be unlawful for any person within the United States, or any person outside the United States if the recipient is within the United States—
(A) to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice—
. . .
(iii) to any telephone number assigned to a paging service, cellular telephone service, specialized mobile radio service, or other radio common carrier service, or any service

The federal district count ruled in favor of Simon & Schuster, primarily agreeing with their first line of defense. In the issued opinion, the district court stated that because “the equipment here does not store, produce or call randomly or sequentially generated telephone numbers… the equipment at issue is not an automatic telephone dialing system under the TCPA.”

Satterfield appealed the court’s decision, and in June of 2009, the Ninth Circuit Federal Appeals Court ruled in favor of Satterfield, stating that the 5th District Court errored by not classifying the SMS messaging system as an ATDS.  Furthermore, the court ruled that the SMS Messages did in fact constitute a phone call as protected by the TCPA.

Obviously this will be appealed again, but for now the legal ramifications are huge in the Mobile Marketing world.  Points to consider when preparing to launch a mobile marketing campaign:

• A SMS Message is considered a phone call under the TCPA.
• A SMS Messaging server is considered an ATDS under the TCPA.
• Consent forms must explicitly inform the user that they may receive SMS promotional messages, especially if the user is using another medium to register the cell phone number.

I expect Satterfield v. Simon & Schuster to eventually go all the way to the US Supreme Court, and the outcome of that case will have a significant impact on the legal routes a company must take when employing a SMS Marketing campaign. In the meantime, it is better to be safe than sorry.  Companies shouldn’t shy away from SMS Marketing campaigns, but they should make sure that they are covered legally when doing so.