August 15, 2012 / 7:10 PM / 7 years ago

UPDATE 2-US regulators clear hurdle for political text message donations

* Carriers’ concerns had put launch on hold

* Phone firms not responsible for fraud, excessive donations

* Carriers can refuse service based on commercial criteria

By Alina Selyukh

WASHINGTON, Aug 15 (Reuters) - 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 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 campaigns of Democratic President Barack Obama and Republican Mitt Romney supported approval of such donations, which were touted as a empowering smaller donors in the 2012 campaign marked by a flood of multimillion-dollar donations.

An official with the Obama campaign, known for its focus on grassroots fundraising, said on Wednesday the team was “working to resolve final outstanding steps” to begin using the program. The Romney campaign did not immediately respond.

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.

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.

“With the carrier and our requests satisfied, we expect to launch (text-to-donate) for major candidates in the coming days,” said Alan Sege, executive vice president at mobile payment processor m-Qube, one of the firms that proposed the plan to the FEC and helped carriers assuage their concerns.


Each carrier is now deciding for itself when, or whether, to start offering the service; candidates could start getting text donations as soon as at least one of the carriers launches.

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.

“Wireless service providers ... may decide, for commercial reasons, to accept only proposals from some political committees and not others,” or none at all, the FEC also said on Wednesday.

For instance, the service could be limited to presidential campaigns or reserved for candidates who are on the ballot, according to examples the carriers presented to the FEC.

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 and brand.

“My concerns regarding the ability of carriers to selectively offer this service were assuaged because the request and opinions are premised on representations that such decisions will be based on objective and commercially reasonable business criteria,” commissioner Cynthia Bauerly said on Wednesday.

The top four carriers, which account for about 90 percent of the more than 330 million wireless subscriptions in the United States, are now reviewing the opinion, representatives said.

Sprint spokeswoman Crystal Davis said the firm “intends to implement this new service in a way that adheres to FEC regulations (and) protects the privacy of our customers.”

“Text to donate programs represent a new opportunity for consumers,” said Verizon spokeswoman Debi Lewis, adding the company was “working with others in the industry to understand how the FEC’s decision could be implemented.”

Carriers and other payment processors would take 30 percent to 50 percent of a cut on political donations, as they do with other non-charity purchases.

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