We recently read an item on the New Media and Technology Law Blog, which is co-authored by a past WLF pro bono publication writer, Proskaur Rose LLP partner Jeff Neuburger, that puts a past WLF Web Seminar into an interesting perspective. The item noted that Verizon Wireless had filed suit under the federal Racketeer Influenced and Corrupt Organizations Act (RICO) against mobile telephone marketers who had contracted with Verizon to use its network to do what’s called “short code” marketing. According to the RICO complaint, these marketers engaged in a complex scheme to mask the fact that they were out of compliance with best practices promulgated by the Mobile Marketing Association. Compliance with these guidelines are mandatory for all who contract with Verizon to utilize their mobile network for marketing. The Texas Attorney General is pursuing action against the same defendants for fraudulently causing mobile phone customers to incur unauthorized text message charges.
It is not surprising that Verizon’s self-regulatory actions are being enforced with the teeth of a RICO action. As those who watched the WLF Web Seminar “Deterring Collusion in Procurement: Proactive Steps Can Protect Companies from Costs and Liabilities of Cartel Activity” a little over a year ago know, Verizon has been a trend-setter in aggressive corporate compliance when dealing with businesses with which they contract. Verizon Deputy General Counsel John Thorn and a Verizon outside counsel – former DOJ Antitrust Division Assistant Attorney General Thomas Barnett – described the highly detailed and organized program the company utilizes to deter and take legal action against cartel behavior occurring within its procurement system.
RICO actions against allegedly deceitful mobile marketers, and private antitrust suits against suppliers may not seem to have much in common, but they both send the type of messages that are critical in the current environment of strict and unforgiving government law enforcement: as a company, we take industry self-regulation and internal corporate compliance very seriously. And in both instances, Verizon is protecting its customers from incurring higher costs –directly through fraudulent cell phone charges, and indirectly through price fixing and other Verizon contractor activities which raise the companies’ costs (which are ultimately passed on to consumers).