Published August 15, 2012
Americans moved a step closer to being able to make campaign contributions by text message on Wednesday when the Federal Election Commission approved protections sought by wireless carriers over fraud and profitability.
The FEC ruled that wireless carriers would have no responsibility for possible fraudulent campaign donations and could decide whether to refuse text-donation services to campaigns if they are not deemed commercially viable.
"Barring some unforeseen issue I think this increases the likelihood that text donations in some form will be used this year," said Jan Baran, a prominent campaign finance lawyer representing carriers. "The carriers are evaluating to see if there are any other concerns that may not have been addressed."
The FEC's historic approval of text-to-donate for political campaigns on June 11 allowed anonymous donations by text capped at $10 per text, $50 per month and $200 per cycle to comply with disclosure requirements.
The campaigns of Democratic President Barack Obama and Republican Mitt Romney both supported approval of such donations, which were touted as a step toward empowering smaller donors in the 2012 campaign marked by a flood of multimillion-dollar donations.
But the mobile companies that would implement the program, including the four U.S. giants Sprint Nextel Corp, Verizon Wireless, AT&T Inc. and T-Mobile USA, asked the FEC for another vote for more specific guidance.
The carriers' two main concerns were about liability over fraudulent or excessive donations and discretion over which campaigns they do business with, industry officials have said.
The FEC on Wednesday put the onus on the political campaigns, saying they were "solely responsible" for ensuring donations comply with federal laws that prohibit donations from corporations, foreign nationals and people under 18 years old.
The FEC also ruled that carriers, like other vendors in the past, should be allowed to develop commercial eligibility criteria that would allow them to refuse text message donation services to some campaigns.
For instance, the service could be limited to presidential campaigns or reserved for candidates who are on the ballot or have a history of successful fundraising, according to examples the carriers' trade group CTIA has presented to the FEC.
"Wireless service providers propose 'to establish objective business criteria that are specific to political contribution text messaging campaigns.' They may decide, for commercial reasons, to accept only proposals from some political committees and not others," the FEC said in the new ruling.
"Alternatively, the wireless service providers may decide that it would not be in their 'commercial' interest to participate in the political fundraising process and 'refuse participation by all political committees.'"
The CTIA's comments to the FEC submitted ahead of the vote also indicate that carriers seek the ability to "refuse to sell services to candidates who, based on the wireless service providers' business judgments, espouse views that may harm the wireless service providers' brands."
That position has raised red flags among some observers who worry it gives phone companies dangerous power to pick and chose participants. Wireless carriers have argued they need that power to protect themselves from damages to their business.
"The brand is so important for these companies, and it doesn't take much to have that sullied," said Jeffrey Silva, a telecommunications policy analyst at Medley Global Advisors.
About 88 percent of U.S. adults have at least one cell phone line and about three-quarters of those use text messaging, according to the Pew Research Center.
The top four carriers account for about 90 percent of the more than 330 million wireless subscriptions in the nation.
Sprint spokeswoman Crystal Davis said the firm was reviewing the FEC's rule and "intends to implement this new service in a way that adheres to FEC regulations for political contributions (and) protects the privacy of our customers."
A T-Mobile representative declined comment, while Verizon and AT&T representatives did not immediately respond to requests for comment.
The 2012 campaign has been marked by an unprecedented flow of multimillion-dollar donations to outside spending groups that have no fundraising limits.
The text donation proposal approved in June had been brought to the FEC by political consulting firms Red Blue T LLC and ArmourMedia Inc and corporate aggregator m-Qube Inc, which serves as a middleman between campaigns and mobile companies.