Presented to 2007 Payday Loan Bar Association Annual Conference

1. Using Text Messaging and E-mails for Marketing & in the Collection Process • Presented to • 2007 Payday Loan Bar Association Annual Conference Presented by Michael J. McSunas 1000 Tallan Building Two Union Square Chattanooga, Tennessee 37402 (423) 756.3000 mmcsunas@cbslawfirm.com www.cbslawfirm.com © 2007 Chambliss, Bahner & Stophel, P.C. All Rights Reserved

2. Overview • CAN-SPAM Act • Unsolicited commercial e-mail • Unsolicited text messages • TCPA • Applicability • Collection process

3. E-Mail Marketing: CAN-SPAM • CAN-SPAM Act is the Federal law that regulates commercial e-mail messages (CEMs) - It does not ban sending CEMs - It does set rules for sending them

4. CAN-SPAM Act Scope • Covers e-mail designed to advertise or promote a commercial product or service • “Transactional or relationship” messages are exempt from most provisions of the Act (e.g., loan account information)

5. CAN-SPAM: Legal Requirementsfor Unsolicited E-Mail • IDENTIFICATION – Must be clearly identified as a solicitation or advertisement for products or services. • OFFER A WAY TO REJECT FUTURE MESSAGES – Must offer a clear and conspicuous opt-out mechanism and must honor opt-out requests within 10 business days. • RETURN ADDRESS – Must contain legitimate return e-mail address, as well as sender’s physical postal address (applies even if you have an existing relationship with recipient). • SUBJECT LINES – Must use accurate subject lines; may not be deceptive.

6. CAN-SPAM: Penalties • Each violation is subject to fines of up to $11,000.

7. E-Mail Marketing: Wireless • FCC Order implementing wireless CEM provisions of CAN- SPAM Act • Bans transmissions of e-mails to domain names associated with wireless services without obtaining express prior consent/opt-in • Mandatory disclosures for valid opt-in • Applies only to messages sent directly – not forwarded • Other CAN-SPAM requirements apply

8. Key Elements of the FCC’s Rules • The rules flatly prohibit sending commercial messages to wireless Internet domains unless the sender has obtained the express prior consent from the recipient (the recipient must “opt-in”). • Ban covers messages sent to cell phones and pagers, if the message uses an Internet address that includes an Internet domain name (whether or not displayed) • 4235551234@wirelesscarrier.com “Opt-in” necessary • sanjayafan@hotmail.com “Opt-out” necessary

9. Opt-in Requirement • Requests for authorization cannot be sent to wireless subscriber’s wireless devices • Consumer must not bear any additional costs to receive an authorization request • Must be able to reply to request without incurring any fee • Cannot be the form of a “negative option” • Web site authorization must include affirmative action on part of subscriber, e.g., checking a box, clicking an “I accept” button

10. Required Disclosures • User agrees to receive e-mails sent to their wireless devices from a particular sender • User may be charged by its wireless service provider for receipt of these messages • User may revoke authorization to receive emails at any time

11. SMS Exception • FCC’s CAN-SPAM ban does not cover “short messages” (“SMS”) sent from one mobile phone to another, that do not use an Internet address.

12. Does The TCPA Apply? • TCPA bans the use of “any automatic dialing system” to make “any call” to “any telephone number assigned to a . . .cellular telephone service.” 47 U.S.C. § 227(b)(1)(A)(iii)

13. Joffe v. Acacia Mortgage121 P.3d 831, Ariz. App. 2005 • Acacia sent an e-mail message to XYZ@att.net (where XYZ was Joffe’s mobile phone number) • Joffe sues for damages under TCPA (CAN-SPAM Act does not provide for a private cause of action for recipients of spam) • Acacia argued that (1) CAN-SPAM Act, not TCPA, applies to unsolicited commercial messages sent to a mobile phone number and (2) TCPA is not broad enough to cover Internet-to-phone text messages

14. Joffe v. Acacia Mortgage • The Arizona Court of Appeals determined that Acacia’s SMS text messages violated the TCPA’s prohibition against making"any call" to a cellular telephone using an “automatic dialing system,” because the use of the word “call” in the TCPA was intended to encompass any and all attempts to communicate by telephone, and was not limited to traditional voice communications.

15. Satterfield v. Simon & SchusterNo. C 06-2893 CW, 2007 U.S. Dist. LEXIS 46325 (N.D. Cal. June 26, 2007) • Came to opposite conclusion • Court ruled contrary to Joffe that SMS text messages are not covered by the TCPA, first, because the manner in which the SMS messages were sent by the marketer does not fit the statutory definition of an "automatic telephone dialing system," and second, because the plaintiff had agreed to receive promotional messages under a broadly worded consent provision, executed in connection with the download of a free ring tone.

16. TCPA Requirements • Need prior express consent from called party • For any “call” (includes sending of wireless text messaging to phone numbers) • Using automated dialing devices • Where the called party is charged • DO NOT CALL LIST • STATE LAW REQUIREMENTS

18. Alternatives • Use social networks for advertising • Both Facebook and MySpace have introduced “Targeted Advertising” programs • Use Free to End User Messaging Services (for both marketing and collection process)

20. Collection Process – E-Mail • Exempt from CAN-SPAM Act due to transactional/relationship exception (even if consumer has opted out) • Follow your privacy policy

21. Collection Process – SMS Messages • Should get express consent from user (e.g., in loan application) and easy means to revoke consent • Disclose that wireless provider may charge for text messages (But ACA has recommended that collectors should not knowingly dial mobile phones and FDCPA specifies that collectors should not “cause charges to be made…” to the debtor.) • NOTE: The ban on autodialed calls applies to any call to a wireless device (it is not limited to commercial messages) • Follow industry best practices (e.g., no late night text messages)