Text message spam could spell trouble for text-based ads

The 40-year-old sales executive from Los Angeles said he uses text messaging sporadically to contact friends, so he was extremely annoyed when he started getting text messages offering him a deal to buy or rent a time-share from Webuyresorts.com.

Even though the unwanted messages were costing Paul 10 cents a pop, he said he wasn't as annoyed about the cost, because he had received only a few of these messages. Instead, he was concerned that his cell phone would soon be hijacked by marketers, including his own cell phone provider, contacting him with unwanted advertisements.

"The real annoyance is that now I can't even be left alone on my cell phone," he said. "I actually cancelled my home phone because I was being bombarded with telemarketing. I guess I thought that my cell phone was a telemarket-free zone."

As more people subscribe to cell phone services?-nearly 220 million in the U.S as of June, according to the CTIA Wireless Association?-marketers see the mobile market as a ripe opportunity. According to research firm Informa, marketers will spend more than $11 billion on mobile advertising by 2011.

Some of the marketing is being done through legitimate channels. Companies such as eBay and Orbitz allow customers to sign up for services that send text message alerts. Cell phone operators are also starting to experiment with sending text messages promoting new services.

But if mobile operators want to exploit this marketing opportunity, they must tread lightly so as not to annoy customers with messages they don't want, experts say. And a recent rise in text message spam could jeopardize these efforts.

Wave of spam coming
Between 2005 and 2006, the volume of text message spam that reaches subscribers is expected to grow by 60 percent, according to market research firm Ferris Research. Because cell phone operators understand the potential damage unwanted messages can have on their customers' willingness to accept any kind of text-based marketing, they've taken aggressive steps to nip it in the bud.

"We have everything to lose if text spam becomes as endemic as e-mail spam, and absolutely nothing to gain," said Jeffrey Nelson, a spokesman for Verizon Wirless.

Even though text-based spam is on the rise, the number of spam messages that actually get through to subscribers is relatively small, said Richi Jennings, an analyst at Ferris Research. In 2005, about 500 million unwanted text messages reached subscribers. In 2006, that figure is expected to be 800 million. And by the end of 2007, roughly 1 billion text-based spam messages will be received by subscribers, Jennings said. By comparison, U.S. cell phone users sent 12.5 billion text messages in the month of June alone, according to the CTIA Wireless Association.

And compared with the amount of e-mail spam, text message spam is a drop in the bucket. According to MessageLabs, which provides Web security services, roughly 73 percent of all e-mail sent worldwide in October was spam.

"The average cell phone user might get five of these text messages a year. Compared to e-mail spam, that's nothing," Jennings said.

But he said the difference is that unlike e-mail spam, text message spam can cost users money. In the U.S., most wireless subscribers pay about 10 cents for each message they send and receive.

In addition to costing consumers money, some of these unwanted text messages have turned out to be what's known as "smishing" attacks or "phishing" attacks adapted for the SMS protocol used to send text messages. Some of these attacks ask recipients to register for a service. Then they attempt to get people to accept a virus or worm on their handset. Others try to extract credit card numbers and other private data.

Most spammers send messages from the Internet using a computer, which allows them to avoid charges associated with sending messages from a phone. But in many ways, this makes finding the spammers relatively easy for the wireless phone companies.

Using basic filtering tools, cell phone operators can detect high volumes of messages coming from a particular Internet account. And if a particular region is affected, they can easily detect an attack.

That's exactly how Verizon Wireless was able to stop an outbreak of text message spam in May, when 1.1 million messages offering discount prescription medications were sent to Verizon Wireless customers in New Jersey. The company noticed that 70 percent of the spam was going to a few area codes. Verizon Wireless was able to track down the Web site where the spam was coming from, in Poland, and have it shut down.

In June, Verizon Wireless filed suit against the company. Since then, it's filed two other lawsuits against text message spammers. In October, it launched a legal action against a company that had sent 30,000 text messages urging recipients to buy stocks. And in September, it sued another spammer for sending more than 550,000 text messages pushing penny stocks to subscribers in New York City.

More suits
Cingular Wireless has also begun taking legal action against text spammers. In October, the company filed three federal lawsuits against text spammers in federal court in Atlanta. The complaints claim that the companies violated the federal Telephone Consumer Protection Act.

The cell phone companies' efforts seem to be paying off. In September, Verizon Wireless said that 5 billion text messages traveled over its network for the month. And the company was able to catch 30,000 it believed were spam.

"Of course, any unsolicited message is one too many for a customer," said Debbie Lewis, a spokeswoman for Verizon Wireless. "But when you look at the numbers, we are able to stop the attacks before they get out of hand."

So what can consumers do to stop receiving unwanted text messages? First, they can limit the number of people they give their cell phone number to. Second, if they do receive a text spam, they should contact their cell phone operator to report the issue and receive a credit. And third, they can disable the text-messaging feature. Verizon Wireless and Cingular Wireless say they allow customers to disable or block unwanted text messages by using a tool on their companies' Web sites.

Even though mobile operators seem to have text message spam under control, they still need to be careful that they don't annoy customers with legitimate text message marketing, experts say.

"The real problem could be text-based advertising from the carriers and their partners," said Iain Gillott, founder of iGillott Research.

"We have yet to see how consumers will react to this," he added. "Companies are still trying different models. But if customers threaten to leave, the carriers will have to stop it. The last thing they want is for people to churn."