Mobile marketing gives brands a direct connection to consumers, but when handled carelessly, it can lead to serious consequences. In 2016, AT&T found itself at the center of a major legal scandal after unauthorized charges appeared on customer phone bills without their full awareness (Federal Trade Commission [FTC], 2016). The result was a $105 million settlement and a massive loss of trust.
This situation, known as mobile cramming, shows how quickly things can go wrong when ethics are overlooked. As mobile marketing becomes increasingly complex, marketers must ensure that every campaign respects both the law and the customer. This blog examines the issues that arose in the AT&T case and offers guidance on how businesses can prevent similar mistakes.
What Law Did AT&T Violate?
AT&T violated the Telephone Consumer Protection Act (TCPA), which requires businesses to obtain explicit, documented consent before sending marketing messages or charging for services via mobile devices (Roesler, 2013). In this case, AT&T billed customers $9.99 per month for ringtones, horoscopes, and trivia services they never knowingly agreed to purchase (FTC, 2016). These small but recurring fees were hidden in mobile phone bills, often going unnoticed for months. According to regulators, AT&T not only failed to stop this practice but also shared revenue with content providers, retaining approximately 35% of the profits from each unauthorized charge (FTC, 2016).
What Were the Consequences for Consumers?
The financial loss per person may have seemed small, averaging about $31, but the real cost was in trust. More than 2.7 million AT&T customers were impacted (FTC, 2016). Many did not understand the charges or how to dispute them. This created confusion, resentment, and a sense of betrayal that cannot be easily repaired. Mobile marketing only works when users feel they are in control. When that trust is broken, users may opt out altogether, avoiding not just your messages but your brand altogether (Garris & Mishra, 2015).
What Penalties Did AT&T Face?
AT&T agreed to pay $80 million in refunds and another $25 million in penalties and compliance costs, making this one of the largest mobile marketing settlements ever recorded (FTC, 2016). Under the TCPA, penalties for violations can be up to $1,500 per message if the court finds that the misconduct was willful (Roesler, 2013). For marketers, this should serve as a cautionary tale. Even large companies can be brought down by unethical mobile practices—and smaller companies might not survive the same hit.
How to Stay Ethical in Mobile Marketing
To avoid legal trouble and build long-term customer loyalty, marketers must embed ethical standards into every mobile campaign. Here are five non-negotiables:
- Always Get Permission
Mobile marketing must be permission-based. Whether through SMS, push notifications, or app tracking, users must opt-in, and businesses must make it easy to opt-out at any time (Adobe Experience Cloud, 2021). - Make Value Clear and Immediate
Users respond to messages that offer clear benefits. Whether it’s a coupon, a reminder, or exclusive content, mobile messages should offer something valuable—not just more noise (Garris & Mishra, 2015). - Be Transparent About Data and Charges
Consumers deserve to know what they’re signing up for. Companies must clearly disclose billing terms, data usage, and third-party involvement in mobile communications. This transparency empowers consumers and builds trust in your brand (Roesler, 2013). - Monitor Your Vendors
If you’re working with third-party vendors, you are still responsible for their actions. In AT&T’s case, the unauthorized charges were passed through outside content providers, but AT&T bore the legal consequences (FTC, 2016). - Respect Frequency and Timing
Respecting user preferences is key. Too many messages can feel intrusive. Research shows that users prefer mobile contact no more than 2 to 4 times per month (Wilson, 2017). Over-messaging leads to opt-outs and brand fatigue. By respecting their preferences, you show that you value their time and attention.
Final Takeaway: Ethics Are Not Optional
AT&T’s mobile cramming case not only violated consumer protection laws. It showed how easy it is to lose the very people you are trying to reach. In an era where mobile is the primary and often the only point of contact, ethical marketing is not just the right thing to do; it is a competitive advantage. The consequences of unethical practices can be severe, leading to loss of trust and legal penalties.
By asking for permission, delivering value, and respecting user trust, marketers can transform mobile from a legal minefield into a channel for lasting connections.
References
Adobe Experience Cloud. (2021, March 26). What is mobile marketing? [Video]. YouTube. https://www.youtube.com/watch?v=EkR5XbmJQT0
Federal Trade Commission. (2016, December 8). FTC providing over $88 million in refunds to AT&T customers who were subjected to mobile cramming. https://www.ftc.gov/news-events/news/press-releases/2016/12/ftc-providing-over-88-million-refunds-att-customers-who-were-subjected-mobile-cramming
Garris, M., & Mishra, K. (2015). A beginner’s guide to mobile marketing. Business Expert Press.
Roesler, P. (2013, October 21). Three legal issues to keep in mind with mobile marketing. Web Marketing Pros. Archived at https://web.archive.org/web/20171219171813/http://www.webmarketingpros.com/blog/three-legal-issues-to-keep-in-mind-with-mobile-marketing/
Wilson, L. (2017, October 2). MKT 311: 5 Top Mobile Marketing Strategies [Video]. YouTube. https://www.youtube.com/watch?v=UHt6U8dPHdA