A group of mobile content providers has agreed to settle class action lawsuits involving claims that they charged wireless subscribers for mobile content without authorization. Over the past few years, various companies have faced similar complaints. In the typical scenario, consumers are enticed by ads that prominently offer free content, but costs associated with that content are relegated to the fine print.
In recent years, the Florida Attorney General has been particularly aggressive in challenging companies that failed to adequately disclose the costs associated with “free” offers. These companies have each had to pay at least $1 million to settle the investigations. In the most recent settlement, the AG even set forth specific guidelines about how disclosures must be made.
Marketers need to clearly and conspicuously disclose costs so that consumers know what they are obligated to pay. If a consumer is surprised about a bill, he is likely to complain, and those complaints often lead to lawsuits or investigations. Marketers should look to the MMA Guidelines and the settlements in Florida for tips on how to make the required disclosures.
Although the subject of the current case isn’t new, the price tag is. The content providers will reportedly have to establish a $9 million fund to pay all claims of settlement members, and pay attorney’s fees of up to $1.85 million. This demonstrates that there can be a high cost associated with failing to comply with legal requirements and best practice guidelines.