2550 M Street, NW Washington, DC 20037 202-457-6000 ______

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October 31, 2013 Monica Desai 202-457-7535 [email protected]

Ms. Marlene H. Dortch, Secretary Federal Communications Commission 445 12th Street, S.W. Washington, D.C. 20554

Re: Ex Parte Notice – A Coalition of Mobile Engagement Providers, Petition for Declaratory Ruling in CG Docket No. CG 02-278

Dear Ms. Dortch:

On October 29, 2013, Monica Desai and Chris Wimbush of Patton Boggs, LLP, counsel to a coalition of mobile engagement providers (“Coalition”),1 and Coalition members participated in three meetings with Federal Communications Commission (“FCC” or “Commission”) staff. The first meeting was with Dave Grimaldi, Chief Counsel and Senior Legal Advisor to Acting Chairwoman Clyburn; individuals from the Consumer and Governmental Affairs Bureau, including: Kris Monteith (Acting Bureau Chief), Mark Stone (Deputy Bureau Chief), Kurt Schroeder (Acting Chief, Consumer Policy Division), John B. Adams (Acting Deputy Chief, Consumer Policy Division), Kristi Lemoine (Attorney), and Karen Johnson (Attorney); and individuals from the Office of , including: Diane Griffin Holland (Deputy Associate General Counsel), Marcus Maher (Assistant General Counsel), and Claude Aiken (Attorney Advisor). The second meeting was with Nicholas Degani, Advisor to Commissioner Ajit Pai, and Michael Beirad, Intern. The final meeting was with Christianna Lewis Barnhart, Acting Legal Advisor to Commissioner Jessica Rosenworcel.

The Coalition members attending in person were Ira Schlussel (Senior , General Counsel, ePrize), Alan Sultan (Senior Vice President, Business Development, Hipcricket), Debra Bernard (Partner, Perkins Coie, Counsel to payvia), Charley Cassell (, Vibes), Cheryl Sanders (Vice President, Business Operations, Vibes), and Jennifer Bagg (Partner,

1 The Coalition consists of the following companies: 4INFO, Inc. (www.4info.com); ePrize (www.eprize.com); Genesys (http://www.genesyslab.com/); Hipcricket (www.hipcricket.com); Mobile Commons (www.mobilecommons.com); Mobile Marketing Association (MMA) (www.mmaglobal.com); payvia (www.usepayvia.com); Tatango (www.tatango.com); Tetherball (www.tetherball360.com); Vibes (www.vibes.com); and Waterfall Mobile Inc. (www.waterfallmobile.com).

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Wiltshire & Grannis, LLP, Counsel to Vibes). The following Coalition members participated by phone: Anna Aban (Business Development Manager, 4INFO, Inc.), Kirsten McMullen (Chief Privacy Officer, 4INFO, Inc.), David Wachs (Senior Vice President, Mobile, ePrize), David Schwind (Director, Global Mobile Relations, Genesys), Justin Gutterman (Mobile Industry Manager, Mobile Commons), Cara Frey (General Counsel, Mobile Marketing Association (“MMA”)), Matt Lesher (, Tetherball), and Matt Silk (, Waterfall Mobile Inc.).

During the meetings, the Coalition discussed in detail the issues raised in its Petition for Declaratory Ruling (“Petition”).2 The Coalition requested the Commission to state explicitly that in those cases where a mobile marketer has already received written consent from a consumer to receive certain telemarketing communications prior to October 16, the Commission’s new Telephone Consumer Protection Act (“TCPA”) rules3 do not require either the consumer or the mobile marketer to take any additional steps for those consumers to keep receiving those telemarketing communications. Previously obtained consumer-initiated text message opt-ins serve as evidence of express written consent that fulfill the same goals the Commission articulated in adopting the new prior express written consent requirement and are compliant with the E-SIGN Act.4 In particular, the Coalition emphasized the following:

I. The 2012 TCPA Order Language Confirms That Consumers Who Have Already Provided Prior Express Consent in Writing Are Not Required To Re-Opt-In Under the New TCPA Rules.

The Coalition described how, under the language of the Order, entities may continue to rely on previously obtained written consent from existing customers in place prior to October 16 - otherwise, key language in paragraphs 67 and 68 of the Order would have been superfluous. In paragraph 67, the Commission explained that a 12-month transition period was appropriate to prepare consent forms and related materials for new customers. The reference to “new” customers would have been superfluous had the Commission intended telemarketers to go back and get additional consent for existing customers. In paragraph 68, the Commission made clear that updated written consent would be needed from consumers who previously had provided non-

2 Petition for Declaratory Ruling, A Coalition of Mobile Engagement Providers, CG Docket No. 02- 278, filed on October 17, 2013 (“Petition”).

3 See Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CG Docket No. 02- 278, FCC 12-21, ¶ 20 (rel. Feb. 15, 2012)(“2012 TCPA Order” or “Order”); see also 47 C.F.R. § 64.1200.

4 The Commission has concluded that consent obtained via text message satisfies the requirements of prior express written consent in accordance with the E-SIGN Act. See 2012 TCPA Order, ¶ 34. See also Electronic Signatures in Global and National Commerce Act (“E-SIGN Act”), 15 U.S.C. § 7001 et seq. (preamble); see 15 U.S.C. § 7001(a).

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written express consent. By stating that “an entity will no longer be able to rely on non-written forms of express consent once our rules become effective,” the Commission necessarily implies that entities will be able to rely on written forms of express consent. Otherwise, that language would be superfluous. Moreover, nothing in the Order reflected any Commission intent to nullify written consent that had been previously obtained.

The Commission’s Notice of Proposed Rulemaking (“NPRM”)5 in this proceeding is instructive in explaining why the Commission made this distinction. The Commission noted that a written agreement helps to “ensure that consumers are adequately apprised of the specific nature of the consent that is being requested”6 and may better protect consumers from “unscrupulous senders” of messages “who erroneously claim to have obtained the subscriber’s oral consent.”7 The Commission further opined that written consent may reduce “confusion” and “protect consumers and industry from erroneous claims that consent was or was not given” because, “unlike oral consent, the existence of a paper or electronic record may provide unambiguous proof of consent.”8 Given that background, the Commission’s distinction between written and non-written consent makes sense, and it is not surprising that the Commission would expect existing customers who previously provided only non-written forms of express consent to now provide written consent so that a verifiable record would be produced.

The Coalition responded to staff questions concerning whether, and if so how, the Federal Trade Commission’s handling of the “grandfathering” issue when eliminating the established business relationship (“EBR”) exemption under the Telemarketing Sales Rule should inform the Commission’s thinking with respect to interpreting the new opt-in requirements for written consent under the TCPA. The Coalition explained that while the EBR exemption is not analogous to previously obtained written consents, it is nevertheless instructive. First, under the EBR, consent would be implied based on an existing relationship between a company and a consumer. As a result, consent based on an EBR is analogous to non-written express consent in that neither produces or relies upon a verifiable written record of consent. This lack of a written record of consent is antithetical to the core of the TSR’s and TCPA’s revised regulations which aim to ensure consumers expressly provide consent in a verifiable written format. Thus, the way the FTC handled eliminating the EBR is similar to how the Commission handled previously obtained non-written consent, which also lacks any verifiable record. The fact that previously obtained written consent produces an express verifiable record is a fundamental distinction that justifies why this form of existing consent was handled differently by the Commission. Second, previously obtained written consent where a

5 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CC Docket No. 92-90, Notice of Proposed Rulemaking, 25 FCC Rcd 1501 (2010) (“2010 TCPA NPRM”).

6 See id., ¶ 19.

7 See id., ¶ 20.

8 See id., ¶ 22.

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consumer expressly and specifically opts-in to receive desired communications is inherently different than consent based on an EBR because consumers may not expect to receive marketing messages in such instances that lack an express opt-in, and, accordingly, it is only logical to treat them differently. Finally, in eliminating the EBR, the FTC prepared companies for retroactive application by explicitly notifying companies that consent based on an EBR would no longer be valid once the new rules became fully effective and describing the transition of existing consents to new consents.9 By contrast, the Commission did not need to describe how previously obtained written consent would be treated under the new rules because it was implied those were not nullified. Instead, the Commission explained that the new requirements applied to “new” customers and updated written consent was only required of consumers who previously provided “non-written” express consent. This distinction further confirms that the Commission did not intend for the new rules to apply to previously obtained written consent. Otherwise, the Commission would have explicitly addressed the issue and given companies notice and guidance concerning the treatment of written consents provided by customers before the new rules took effect in the same way the FTC did when explicitly eliminating the EBR exemption for both existing and new customers.

II. Applying the New Rules Retroactively to Previously Obtained Written Consent Would Be Inconsistent With General Principles of Administrative Law.

The Coalition emphasized that nowhere in the Order did the Commission indicate any intent to nullify previously obtained written consent. This is not surprising because (1) applying the new TCPA rules to previously obtained written consent would be inconsistent with the general principle that rules adopted by administrative agencies are applied prospectively;10 and (2) if the Commission had intended to apply the new rules retroactively, it would have included this proposal in the underlying Notice of Proposed Rulemaking in order to provide stakeholders with the requisite notice or opportunity to comment. Given the lack of any indication the new rules would retroactively apply to previously obtained written consent, coupled with the total absence of any indication that the Commission intended to nullify previously obtained written consent, the Commission should state explicitly that the new rules apply only to new customers beginning on October 16, 2013, and to existing customers who had only provided non-written forms of express consent prior to October 16.

The Coalition emphasized that the central purpose of the revised TCPA rules is to obtain verifiable written consent for the policy reasons described in the underlying NPRM, including to ensure consumers adequately understand what they are consenting to, to protect consumers from

9 See Telemarketing Sales Rule, Final Rule Amendments, 73 Fed. Reg. 51164, 51187-88 (2008).

10 See, e.g., High-Cost Universal Service Support, et al., Report and Order and Memorandum Opinion and Order, 25 FCC Rcd 3430, ¶ 11 (2010) (“Generally, rules adopted by administrative agencies may be applied prospectively only.”).

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erroneous claims of consent, and to reduce consumer confusion.11 In instances where the customer has already provided written consent prior to October 16, and has been receiving messages since then, these important goals have already been achieved. Thus, the Commission’s goals would not be advanced by invalidating those prior written consents for messages that will be delivered after October 16, 2013, when existing written consents already fulfill the same objectives that the new prior express written consent rules have been designed to achieve.

III. The Mobile Marketing Industry Adheres to Rigorous Guidelines That Ensure Consumers are Protected through a Consumer-Initiated, Verifiable Opt-In Process and an Easy, Unrestricted Opt-Out Process.

The Coalition described how all senders of messages through the short code channel are subject to comprehensive wireless industry standards that serve as de facto rules. Cara Frey, General Counsel of the MMA, discussed the history of compliance with these standards in the mobile marketing industry and how the MMA has helped to lead and coordinate those efforts. Specifically, Ms. Frey explained how the rules contain rigorous requirements before a mobile text messaging telemarketing campaign can be launched, including a requirement that express written consent must be obtained before a mobile marketer can send any telemarketing messages to a consumer. Furthermore, through continuing monitoring of campaigns through their lifecycle by both carriers and aggregators, programs that become out of compliance after their launch may have their short codes suspended or terminated.

Cheryl Sanders, Vice President of Business Operations from Vibes, provided a detailed description of the consumer experience of participating in a campaign, including the disclosures provided by industry to enable consumers to make informed choices about participation in a program and the full control that a consumer possesses over whether or not to opt-in or out of a program. Specifically, she described that pursuant to rigorous industry standards, a consumer must affirmatively take action through a structured opt-in process before being sent any promotional or telemarketing content through text messages. Importantly, she also emphasized that, during the course of the text message campaigns, under the industry guidelines, a consumer is informed of and enabled to stop participating in and receiving messages from any program at any time, including by texting STOP or similar keywords.

IV. The Commission Would Have Addressed the Widespread Confusion and Burdensome Impact Related to Requiring Millions of Re-Opt-Ins if it Had Intended the New Rules to Nullify Prior Written Consent.

During the meetings, the Coalition described the inevitable widespread consumer confusion and substantial industry impact that would occur as a result of requiring re-opt-ins in cases where customers have already provided written consent. As a practical policy matter, such a broad

11 Rules and Regulations Implementing the Telephone Consumer Protection Act of 1991, CC Docket No. 92-90, Notice of Proposed Rulemaking, 25 FCC Rcd 1501 (2010) (“2010 TCPA NPRM”).

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requirement would mean millions of existing customers, who have already provided written express consent to receive desired mobile marketing messages, would have to opt-in again to continue to receive the same communications that they have already been receiving. The Coalition explained that this does not make sense because these same consumers have been and remain free at any time to revoke their consent to receive marketing messages for any reason.12 David Schwind, Director of Global Mobile Relations for Genesys, explained that, particularly in instances when an initial opt-in was not recently provided, getting an additional opt-in request may be confusing to a consumer. Thus, in this narrow context, Mr. Schwind stated that instead of adding any protections for consumers, a message out of the blue notifying a consumer that “no purchase is necessary” for messages they have already been receiving, and that these messages are being sent through “automatic dialing,” and then requiring an affirmative response to confirm that the consumer understands this message, would very likely result in confusion and inconvenience without being counterbalanced by any substantial benefit to the consumer.

As an example, Kirsten McMullen, Chief Privacy Officer of 4INFO, Inc., described how 4INFO provides free informational alerts to consumers via text message, such as sports scores, weather forecasts, and words-of-the day. Their service is supported by appending advertising to the informational text messages. Consumers only receive these messages if they have opted in to register for the alerts via 4INFO’s web site, in compliance with all CTIA and Mobile Marketing Association guidelines, and with full and clear disclosure that it is an advertising supported service in which they may see ads at the bottom of the informational content that they are requesting. These ads are separated from the informational content with an “AD:” prefix, or an asterisk, as is required by MMA guidelines. 4INFO explained that consumers value this service tremendously, evidenced by the fact that they have many subscribers who have been registered for years. For these existing users, requiring an additional written opt-in now would be both confusing and intrusive. These users are well aware of their opt-in and what it entails, particularly since most receive daily text messages. For these users, the service must be considered valuable and well worth the “price” of the appended advertising, otherwise they would have opted-out already. In these cases, a new opt-in request would serve as an annoyance and an interruption to the services they have already opted into without providing any new or better information.

The Coalition also described what the impact would be if previously obtained written consents were nullified, emphasizing the tremendous amount of time and resources that would have to be spent in obtaining additional new written consents, as well as the substantial resources that would be wasted if all existing written consents were invalidated. Ira Schlussel, Chief Legal Counsel for ePrize, and Matt Lesher, Chief Operating Officer for Tetherball, described the lengthy process and considerable investment companies make to develop subscriber lists, including developing print material, broadcast commercials, emails and various incentive programs to promote subscribership. Mr. Lesher emphasized that adding a call to action to marketing materials is an involved process that goes beyond simply adding words to marketing materials. Instead, the brands must work with the

12 See Petition at 5.

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SMS provider and legal counsel to make sure all of the applicable terms and conditions as required by the MMA and CTIA are properly included. In addition, CTIA audits calls to action and if they do not meet the precise requirements, they must be changed. Mr. Schlussel and Mr. Lesher explained that if the consents that have already been obtained are deemed to be invalidated by the new TCPA rules, these valuable subscriber lists that brands have spent a great deal of resources to develop and that contain subscribers that have already provided verifiable written consent would be reset to zero, nullifying the significant investment that has already been made.

Furthermore, the Coalition pointed out the chilling effect and practical difficulties associated with an interpretation that would require a fresh written opt-in each and every time the Commission decides to change its rules. It would not be reasonable for the Commission to expect the mobile marketing industry to re-set their subscriber database to zero every time the Commission decided again that new or different disclosures might be required under the TCPA. Otherwise, the substantial investments made by mobile marketers in building databases based on current regulations would continuously be at risk of losing all value. This obviously could not have been what the Commission intended.

The Coalition explained that the impact of nullifying the written consents that have already been obtained would be especially challenging for small business that operate in the mobile space. Because imposing the new rules on these entities would be extremely burdensome and costly, the Coalition pointed out that the Commission would have analyzed this impact under the Regulatory Flexibility Act (“RFA”).13 Instead, as further evidence that Commission did not intend to apply the new rules to previously obtained written consent, the 2012 TCPA Order’s Final Regulatory Flexibility Analysis contained no such analysis.

Finally, as an alternative, the Coalition would likely be comfortable sending a notice to consumers containing the new “automatic dialing” and “no purchase necessary” disclosure language to existing customers who have already provided written consent prior to October 16, 2013, without requiring a response. While such a notification may be confusing to consumers, it at least minimizes the impact to consumers and the potential inadvertent disruption of desired communications by eliminating the need for consumers to take any additional steps to re-opt-in. Thus, to the extent that the Commission believes the new rule disclosure language is important to existing customers who have already provided written consent, the Coalition agrees that this is an idea worth exploring. The Coalition wants to emphasize, however, that text messaging is often used to authenticate purchases, online logins, or password restorations, and in those contexts it would be false to inform a consumer that no consent to receive text messages is a condition of purchase. Common examples include

13 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601-612, has been amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, Title II, 110 Stat. 857 (1996). The RFA requires agencies to consider the impact of their regulatory proposals on small entities and to consider regulatory alternatives that will achieve the agency’s goal while minimizing the burden on small entities

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purchasing apps, ringtones, music, news alerts, newspapers, long distance telephone service (like Skype) by receiving a PIN message or texting a keyword to a short code.

V. Expeditious Clarification is Necessary to Eliminate the High Risk of Frivolous Class Action Lawsuits Based on the Lack of Explicit Language in the Order Related to Previously Obtained Written Consent.

Ms. Desai, counsel to the Coalition, described the explosive growth of TCPA litigation, noting that the TCPA has spawned an entire class action litigation industry. She explained that this growth is due in large part to the fact that under the TCPA (1) companies face strict liability, (2) there is a penalty of $500-$1500 per message, (3) there are uncapped damages, and (4) there is no common sense check on litigation theories. As a result, even if there is a reasonable defense, given litigation risk and costs, companies feel forced to settle or otherwise risk extraordinary exposure. Ms. Desai provided statistics on the growth of TCPA litigation, highlighting that in 2008 there were under 20 federal TCPA class action cases, while in 2012 that number jumped to over 1100 federal TCPA cases.14 These numbers are on pace to be even higher in 2013.

Ms. Desai also explained that there is no downside for class action lawyers to just keep filing lawsuits, as the payoff is very high for the lawyers. In fact, payments to the class members are typically dwarfed by the legal fees. As a result, consumers who are the intended beneficiaries of the TCPA rarely benefit from TCPA class action litigation while payouts for TCPA attorneys continue to rise. The Coalition emphasized that without the requested clarification, companies will be forced to either accept the risk of defending against frivolous TCPA litigation, agree to large settlement agreements regardless of liability, and adopt unnecessary, expensive, consumer-unfriendly approaches that the Commission never intended, or remove themselves from the mobile marketing space entirely.

Respectfully submitted,

______Monica S. Desai Patton Boggs, LLP 2550 M Street, NW Washington, DC 20037 (202) 457-7535 Counsel to a Coalition of Mobile Engagement Providers

14 See WebRecon, FDCPA and Other Consumer Lawsuit Statistics, Dec 16-31 & Year‐End Review, 2012, retrieved from https://www.webrecon.com/b/fdcpa‐case‐statistics/for‐immediate‐release‐fdcpa‐and- ‐other‐consumer‐lawsuit‐statistics‐dec‐16‐31‐year‐end‐review‐2012/.

4842-5137-3078.5.