Dealing with Networks and Regulatory Compliance:

The Legal Side of Mobile Retail Presented by James Mann and Ronnie London

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WHY THE NETWORKS ARE HERE TO STAY (AND SOME SUGGESTIONS FOR DEALING WITH THEM)

James H. Mann

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Two things to keep in mind:

First, adapted from Samuel L. Clemens: Reports of the networks’ death* have been greatly exaggerated

3 *E.g., ETA Strategic Leadership Forum (10/11): 70% agreed with statement “IPSPs like PayPal are a direct threat to . . . card brands.”

Second, adapted from Sun Tzu: Each battle involving the networks is won before it is fought.

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Greatly exaggerated: highly strategic functions with high barriers to entry

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Greatly exaggerated: funding sources for so-called “disintermediators”

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Greatly exaggerated: Processors for so-called “disintermediators” – e.g., LevelUp and BAMS

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Greatly Exaggerated: Selected Alliances with Innovators

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Greatly Exaggerated: DWO Fees

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Greatly Exaggerated: Key to Cloud/Tokenization

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Greatly Exaggerated: What About PayPal?

From eBay’s 2011 10-K (pp. 50-52): “Payment card networks . . . enable PayPal’s acceptance of credit cards and debit cards . . . PayPal is required by its processors to comply with payment card networks’ operating rules . . . PayPal is also required to comply with payment card networks’ special operating rules for Internet payment services . . . PayPal has incurred fines from its payment processors. . . .”

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Before it is fought: Selected Network Leverage Points

Price Giver Regulator Competitor

(e.g., Truaxis, etc.)

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Before it is fought: Survival Tips for Selected RAMP Attendees

For Tech startups:

• Investment

For Retailers:

•Privity; linkage; disintermediation

For Banks:

•Linkage; disintermediation; quasi-disintermediation (white-labelling)

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UPDATE ON MOBILE REGULATORY ISSUES

Ronnie London

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FCC Automated Dialing System Rules

• Recorded sales calls require prior written, signed consent

TCPA and FCC (and FTC) Rules allow non-

sales autodialed & recorded message calls

to landlines

• Includes texting, prerecorded/artificial voice calls, and auto/predictive-dialed live agent calls • And, for sales, prior written, signed consent

required

But, bar automated calls to mobiles – of any content, i.e., sales and non-sales – absent prior

express consent

FCC: Providing phone number = express consent – but only for debt collection/past-due calls

FCC Automated Dialing System Rules

• Adoption of rules purporting to mirror the FTC’s for prior, written signed consent for telemarketing • But FCC rules have broader effect,

especially for cells • Now 6 months closer to needing prior

written signed consent for telemarketing/telephone-solicitation, including texts – must have by Oct. 16, 2013

• Text-message opt-out confirmation ruling • Removed uncertainty, but narrow

conditions

2012 Developments

Litigation Lessons

TCPA class action uptick followed Concepcion’s

allowance of better enforceability of

consumer arbitration agreements

Texting prospects with whom there is no

relationship – and, thus, no arbitration agreement – offers fertile ground for plaintiffs’ class action bar

But, on the upside, some courts are upholding

arbitration agreements against TCPA claims

So, get arbitration agreements where you

can

Litigation Lessons

Consent

•Providing phone number does not equal consent outside the debt collection/overdue account context • In re Jiffy Lube Int’l,

Inc., Text Spam Litig.

•But see: Pinkard v. Wal-Mart Stores, Inc.

Vicarious liability

•Hiring third party does not by itself avoid liability •Jiffy Lube •Stonebridge Life •But see: Thomas v.

Taco Bell Corp

Litigation Lessons

Chesbro v. Best Buy: “Informational” v. “Telemarketing”

• Ninth Circuit reverses dismissal class action, holding calls can seek purchase/rental of property/goods/services by implication, even if not expressly mentioned or any “pitch” is made • Script: Hello, this is Andrea from Best Buy Reward Zone

calling for (first and last name) to remind you that your Reward Certificates are about to expire. (Certificate amount) dollars in Reward Certificates were mailed to you on (Mail date) and they will expire if not used by (Expiration Date). If you do not have your reward certificates, you can re-print them online at myrewardzone.com. Thank you for shopping at Best Buy.

Litigation Lessons

Meyer v. Portfolio Recovery Assocs.,

LLC

•Enjoined autodialing numbers obtained via skip-tracing for overdue account calls

Lynn v. Monarch Recovery Mgmt.,

Inc.

•Skip-tracing to phone numbers assigned to VoIP services that charge for incoming calls and incoming caller ID violate TCPA autodialer prohibition

Soffet v. Enhanced Recovery Co., LLC

•Overdue account calls to number provided by indebted consumer but later reassigned to an unrelated third party violate TCPA despite FCC debt collection declaratory ruling

Mobile Communications Regulation

FTC Continues Strong Focus on Privacy • Updates rules implementing COPPA (Children’s Online

Privacy Protection Act) • Staff Recommendations for Mobile App Privacy

Disclosures • Staff Report on Mobile Payments • “Dot.com Disclosures” update

NTIA • Mobile App Privacy Code of Conduct expected in

next 3-6 months

CA AG issues Mobile App privacy guidelines

Mobile Communications Regulation

NAI (Network Advertising Initiative)

Announces plans for guidelines on

collection and use of data on mobile

devices

Seeks comment on revised data

collection code of conduct

Digital Advertising

Alliance (DAA)

Plans to unveil mobile privacy

guidelines

Questions?

James Mann New York – 212.603.6482 jamesmann@dwt.com

www.paymentlawadvisor.com

Ronnie London Washington, D.C. – 202.973.4235

ronnielondon@dwt.com www.privsecblog.com

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