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It’s time to play. Now what could possibly be wrong with that?

The traditional methods of promoting a business with sweepstakes, contests and giveaways are a little difficult to adapt to online commerce, at least from the legal perspective. For businesses vying for the young, male, technologically sophisticated customer, they have a slightly musty scent anyway.

What about promoting your online business through mobile games? The basic theme has any number of variations — in-game advertising, promotional offers as rewards for beating levels of the game, using customer purchases to unlock a new level of the game, or advergaming, in which the sole purpose of the game is to promote a product. The game does not lead to a prize. The prize is the ability to keep playing.

On one hand, this looks like a way to reach a certain market and to avoid the risk of many layers of federal and state legal compliance.  On the other, it may be received as SPAM, which everyone hates and which is regulated by federal law. Then there are privacy issues, which are still largely the purview of state law.

Who Regulates Marketing Embedded in an App?

On the federal level, confusion reigns. Recall that in recent arguments before the Supreme Court, attorneys resorted to analogies involving rabbit-ear television antennas. Regulatory attempts in the mobile broadband world are piecemeal and enforcement action rare.

In general, the Federal Communications Commission regulates wireless devices and telemarketing.  The provisions of the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act, were originally designed to control unsolicited text messages and do not obviously extend beyond that medium. The FCC has struggled, unsuccessfully so far, to develop a framework for the wider digital world.

The Federal Trade Commission Act prohibits false and deceptive advertising, and the FTC could presumably step in if mobile advertising violated those standards.  In a recently released study, and with a nod to privacy concerns, the FTC has recommended that mobile shopping apps disclose how they collect, use and share consumer data.

The Food and Drug Administration has announced that it will regulate medical device apps. One can also imagine situations in which the Department of Justice or the Department of Homeland Security might hypothetically become involved in mobile marketing that incited or enabled various federally prohibited activities, like terrorism or racial discrimination.  The regulatory framework that either exists or seems likely appears to focus on the underlying product, rather than the means of communication.

All in all, though, it seems safe to assume that Washington is not ready for enforcement activity with respect to marketing via mobile games. That leaves the states, and California seems to be in the forefront of regulation.

California Focuses on Privacy Protection

Mobile marketing requires the user’s data, and data collection is a legally sensitive issue. California’s Online Privacy Protection Act of 2003 required websites to develop and disclose a privacy policy that details the kinds of information gathered by the website, how the information may be shared with other parties and, how a user can review and make changes to their stored information.  Notably, the law does not prohibit information gathering. It is just a disclosure rule, but it applies to all entities that do business with California residents, so it has national reach.

In early 2013, the California Attorney General extended the same requirements to mobile apps through a directive entitled “Privacy On the Go, Recommendations for the Mobile Ecosystem”.  App developers are urged to:

  • Compile a data checklist of personally identifiable information that the app will collect,
  • Avoid collecting unnecessary data,
  • Ensure that the privacy policy is clear and accurate and
  • Make the privacy policy conspicuously accessible to all.

These requirements clearly apply to marketers who develop their own games and collect information. But what if the promotional element is simply a static ad that delivers no data to the advertiser, something along the lines of product placement in films?  It appears that OPPA requirements would not not flow through to the advertiser. That approach hardly seems to use the full potential of game-based marketing, however.

Industry Self-Regulation

Various associations of mobile marketers set standards and describe best practices that appear to incorporate legal requirements for text messaging, multimedia messaging, and push notifications, but they do not seem to reach promotional efforts embedded in games.

What Should an Adventurous Marketer Do?

The entrepreneur who wants to embed marketing efforts into mobile games should keep two layers of regulation in mind.  The first has to do with the underlying message, which must comply with established federal and state advertising law, regardless of the method of communication.

The second is medium specific because mobile broadband marketing has the tantalizing potential to be individualized and highly interactive.  Clear federal guidance has yet to emerge, so complying with California's OPPA is probably a good way to demonstrate a good faith effort at legal compliance. It is necessary, in any event, to market to California residents.

Disclosure is the key. Disclose the kinds of information gathered, with whom it may be shared, and how an individual might review and correct it.  Realistically, disclosure may carry few risks. The younger demographic that plays mobile games is probably already inured to the idea that privacy is something that exists more in theory than in practice.  For the gamer, if it's a good game, data collection may not be much of an issue. For the marketer, it's a opportunity to get the product in front of a new audience.  So, play is good for business.



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