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Mobile Ads to Kids? FTC Opens Debate

Wherever mobile users go, including the kiddie set, advertisers are sure to follow. But when it comes to the children shouldn't there be some rules?

The Federal Trade Commission is getting some answers via two days of town hall meetings to consider the consumer implications of the developing mobile marketplace.

In recent years, increasingly younger consumers have become mobile phone users. The rise of family plans, go phones and the mounting sense among parents that they should be able to reach their children at any time of the day have put mobile devices in the hands of more and more teens and young children.

"These cell phone demographics are not lost on marketers and advertisers," said Stacy Ferguson, an attorney in the FTC's division of advertising practices. "The ability of advertisers to reach out to children and interact with them through their cell phones has raised concerns from the perspective of consumers, and of course, parents."

One of the principal challenges of mobile marketing is the unique billing features involved with the medium. Panelists at today's hearing said that it has become common for parents who give their kids phones through a family plan to later experience sticker shock on higher bills thanks to their kids' texting habits.

The panelists also raised the question of whether it should even be permissible to target ads for premium mobile services, such as wallpapers and ringtones, to children and teens who are considered too young to have their own mobile accounts.

The age issue in the mobile realm is in many ways an extension of concerns about protecting kids on the Web. Eileen Espejo, senior associate at the public interest group Children Now, suggested that Congress needed to update the Children's Online Privacy Protection Act of 1998 to include guidelines for the mobile space.

Many mobile marketers are including age verification roadblocks in their messages, where a user is asked to input his age before he can make a transaction or access content deemed inappropriate for youths under a certain age, said Michael Becker, executive director of business development for the mobile marketing company iLoop.

The so-called age challenges that are embedded in mobile content are similar to the prompts that alcohol companies uniformly put on their Web sites asking users to input their birthday. Of course, it is easy for a user to lie about his age. On the Web, there are cookie-based workarounds that can prevent a user who is denied entry from returning to the site and entering a different age. Mobile marketers are still trying to develop a technological solution to implement a similar roadblock on cell phones, Becker said.

The Mobile Marketing Association released a set of best practices in December to guide advertisers trying to reach consumers on the so-called third screen. The principles call for, among other things, advertisers to offer a two-fold opt-in before processing a transaction for a premium service. In this way, even after a customer responds affirmatively to a marketer's message, the product or service is not to be delivered until the consumer responds again to a confirmation message, reaffirming his intent to make the purchase.

The panelists, who included representatives of the National Parent Teacher Association (NPTA) and the American Psychological Association, claimed that for all the transparency and straightforwardness that marketers might exhibit, children can still make transactions on their mobile devices against their parents' wishes.

David Diggs, executive director of the Wireless Foundation, a nonprofit group formed under the aegis of the wireless industry association CTIA, said that mobile operators were waking up to the concerns of parents. They are recognizing that there is a business opportunity in the problem of mobile marketing geared for children.

"Carriers will begin to ask for your business based on their family friendliness," Diggs said. All of the major offer features that parents can use to regulate kids' mobile activities, such as the ability to turn off Internet access, filter Web content and block unwanted calls or text messages.

Many are also experimenting with time controls, where a feature such as text messaging would be off limits during proscribed hours, Diggs said. Some phones can be programmed to cut off service altogether during certain times. Some carriers are also sending an e-mail notification to parents asking for approval when a transaction is initiated on a mobile phone covered under a family plan.

Todd Haiken, the NPTA's acting manager of public policy, suggested that blackout periods were not a workable solution for the issue of child marketing, because it runs counter to the very reason parents are giving their kids cell phones in the first place.

"The idea now is that I want my kid to be able to get in touch with me any time of the day anywhere for any reason," Haiken said. He sees a solution at the carrier level. On issuing a family plan, the wireless service provider would implement filters to block certain messages and transactions on phones assigned to youths.

The willingness of the carriers to choke off marketing opportunities at a time when many are just warming up to the idea is another question.