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Careful: text-message advertising may violate federal law

If you’re thinking of using a text-message advertising campaign for your company, be aware of the possible legal hurdles. Recently, a company called Nextones began giving away free ringtones. In order to get one, customers had to agree to receive text messages from Nextones affiliates.

Nextones then licensed its list of customers to publisher Simon & Schuster, which used it to blast text ads for a Stephen King novel. The problem? According to a federal court in San Francisco, Simon & Schuster might have violated the “Telephone Consumer Protection Act,” a 1991 law that says you can’t make automated calls to a cell phone unless you have the owner’s consent.

Simon & Schuster argued that it didn’t make any calls; it merely sent text messages. But the court said that a text message amounted to a call (even though text messaging wasn’t around back in 1991 when the law was written).

Simon & Schuster also argued that since it had licensed the customer list from Nextones, it was an “affiliate” of Nextones. But the court said that it wasn’t an affiliate because the two were separate and unrelated companies. A mere licensing agreement wasn’t enough.

The bottom line is that text-message advertising is still in its infancy, and exactly what’s legal and what isn’t is in many cases still uncertain.

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