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Socially Aware Blog

The Law and Business of Social Media

Status Updates

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Yik Yak arrests.  For several months now we at Socially Aware have been writing about how college students have been using the purportedly anonymous messaging app Yik Yak to communicate deeply offensive remarks and threats of violence.  Now The Huffington Post reports that students at seven universities have been arrested for doing just that.  Since September, at least 11 students at colleges including the University of Georgia and Penn State have been charged with everything from unlawful use of a computer to harassment for using Yik Yak to threaten violence.  Police and college IT services departments have been tracking down the students based on their IP addresses and, when available, GPS locations—information that Yik Yak has reportedly been consistently willing to surrender.  As my colleague Sue McLean warned in June, “The truth is that ‘anonymous’ doesn’t necessarily mean anonymous. Even if users are not required to provide any form of contact details to use an anonymous app, the app is very likely to collect certain information that will help identify the user.”  Based on the $63 million that Yik Yak secured in its third round of funding, investors seem to be turning a blind eye to the apparently compromised anonymity that the app provides.

YouTube for tots.  A recent study shows that the video sharing site YouTube is the most popular website among U.S. children between the ages of eight and 11.  Despite the site’s professed age restrictions, which require a user to be at least 13 to create an account, 69% of the 500 tweens recently surveyed by the Chicago-based agency The Marketing Store said they have a YouTube account, and 93% say they use the service regularly.  Google, YouTube’s owner, has reportedly been trying to develop a kid-friendly version of the video sharing site. In order to do so, Google would need to be careful not to run afoul of the Children’s Online Privacy Protection Act, or COPPA, which imposes strict limits on how companies can collect information on children under 13.

License to hack.  According to data security experts, the ride-sharing start-up Uber’s lack of privacy protections and stash of GPS-quality-precision travel information make it more of an espionage target than “any private entity of any kind.”  The detailed data the company collects would be especially valuable to maliciously motivated foreign powers—Uber is popular with Washington’s political class—as well people involved in corporate espionage and acrimonious divorces.  Therefore, a data security expert advises, when traveling to sensitive meetings or secret rendezvous, Uber users interested in protecting their privacy should take steps like “requesting a ride to another nearby address.”  While such measures may catch on with the tin foil hat crowd, we suspect that they are less likely to find acceptance with average Uber user.

FTC Enforcement Action Confirms That Ad Disclosure Obligations Extend to Endorsements Made in Social Media

Posted in FTC

The Federal Trade Commission (“FTC”) has once again made good on its promise to enforce against deceptive advertising under Section 5 of the FTC Act, regardless of the media in which the advertising appears:  Its recently announced proposed complaint and draft settlement with the advertising firm Deutsch LA, Inc. involves endorsements posted by social media users.  The action unmistakably signals to companies that advertise through social media—especially by leveraging user-generated content—that they need to comply with Section 5’s disclosure requirements.

As discussed below, not only is it deceptive to post bogus endorsements, but a clear and conspicuous disclosure of any material connection between an endorser and the advertising company is necessary in order to avoid a charge of deception.

Online Advertising Disclosure Requirements Under Section 5 of the FTC Act 

Section 5 of the FTC Act bars “unfair or deceptive acts or practices.”  This prohibition extends to advertising, marketing and other promotional activities, including the use of endorsements.  The FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (“Endorsement Guides”) represent the FTC’s interpretation of the application of Section 5 to the use of endorsements and testimonials in advertising.  See 16 CFR § 255.  In other words, they explain how an advertiser using endorsements can avoid engaging in deceptive practices.

The FTC defines an “endorsement” as an advertising message that “consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser.”  See id. at § 255.0(b).  According to the Endorsement Guides, a customer endorsement must be from an actual, bona fide user of the endorsed product or service.  In addition, if there is any material connection between the endorser and the advertiser that consumers would not reasonably expect—such as payment or other exchange of consideration, or an employment relationship—then that connection must be clearly and conspicuously disclosed.  Because such information is likely to affect the weight or credibility that consumers will give to an endorsement, a failure to clearly and conspicuously disclose it is deceptive.

The FTC staff has provided guidance on how to effectively make clear and conspicuous disclosures in online advertising.  When the staff initially released its Dot Com Disclosures guidance in 2000, it affirmed that Section 5 applies to online advertising, just as it applies in the brick-and-mortar world.  In 2013, the FTC staff released updated Dot Com Disclosures, specifically addressing how to make appropriately clear and conspicuous disclosures online, including on mobile devices.  The guidance reaffirmed that disclosures that are required to avoid deception or to otherwise comply with the law must be presented in a clear and conspicuous manner—no matter the media in which they appear—and asserted that, if an advertiser cannot make a required disclosure effectively in a particular medium, then it should not run the ad in that medium.

The Deutsch LA Endorsement Action 

The proposed settlement with Deutsch LA arose out of the advertising firm’s alleged activities relating to the promotion, on behalf of its client Sony, of the PlayStation Vita handheld gaming console.  (The FTC also reached a proposed settlement with Sony.)  The gravamen of the FTC’s complaint related to allegedly deceptive advertising claims about the console’s technological capabilities.  The FTC also, however, included a count relating to the advertising firm’s use of Twitter to promote its client’s console.  Specifically, the complaint alleged that Deutsch LA employees responded to a request from an assistant account executive to use their personal Twitter accounts to post positive comments about the Sony console, using the same “#gamechanger” hashtag.  The complaint includes examples of the employees’ tweets, such as “One thing can be said about PlayStation Vita…it’s a #gamechanger.”

The FTC alleged that the employees’ tweets were deceptive because they falsely purported to be endorsements from actual users of the Sony gaming console.  Moreover, the fact that the tweets were written by employees of Sony’s ad agency would have been material to consumers in making decisions about whether to purchase the console.  For this reason, the tweeters’ failure to disclose their connection to Deutsch LA (and, in turn, to Sony) was allegedly deceptive.

In light of both the Endorsement Guides and the revised Dot Com Disclosures guidance, this FTC enforcement action is not surprising.  The Endorsement Guides establish that the failure to disclose a material connection is deceptive, and Dot Com Disclosures affirm that the FTC’s rules on necessary disclosures apply to any message, whatever the medium, and expressly including even “space constrained ads,” such as tweets.

What’s Next?

The Deutsch LA proposed consent order bars the company from representing that an endorser of a product is an independent user or ordinary consumer of the product, if that is not the case, and it requires the ad agency to make clear and prominent disclosures of any material connections between an endorser and Deutsch LA and/or entities on whose behalf it promotes a product or service.  The action thus reaffirms that individual endorsements that appear in social media must clearly and conspicuously disclose any material connection between the endorser and the advertiser of the endorsed product or service.

The FTC has brought cases based on deceptive endorsements before.  For instance, in 2010, In re Reverb Communications (also an advertising agency), the FTC alleged that Reverb’s employees posted reviews in iTunes about the agency’s clients’ gaming applications, without disclosing their relationship to the agency or its clients.   Deutsch LA, however, appears to be the first time that it has brought an enforcement action against endorsements made on social media.  Now that the FTC has followed through on its Dot Com Disclosures guidance that tweeted ads are just like any other advertisements—and thus require the same clear and conspicuous disclosures as in any other media—the obvious question is, what’s next?  Now that social media is multimedia (see, for example, Instagram and Pinterest, which let users post photos and videos), brands are likely to leverage users to incorporate promotions into their personal feeds.

For instance, if a brand discovers that a popular Instagram user takes compelling pictures that meld with the brand’s image, the brand might engage that user to produce content on behalf of the brand and to use a hashtag or some other means to promote the brand organically in the user’s feed.

If the brand does not require the user to disclose—clearly and conspicuously and in each picture, tweet or other post—that he or she has a material connection to the company, then both the company and the user run the risk of being subject to a charge of deception.

Status Updates

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Between a lock and a hard place. Should search engines be responsible for verifying the legitimacy of the companies they include in their search results? A locksmith in Lorton, Virginia, is claiming that they should. Mark Baldino of Baldino’s Lock & Key asserts that, despite having paid $1 million in advertising fees to search engines over the last several years, his business has declined by about $2 million. And so he’s fighting back. In a lawsuit that he’s filed in Virginia federal court, Baldino alleges that Google, Yellowbook and Ziplocal violated several state and federal laws by knowingly listing unlicensed locksmiths in their search results, thereby forcing Baldino to purchase advertisements that make his business stand out among the imposters. He’s seeking damages and an injunction requiring the search engine defendants to prevent unlicensed locksmiths from appearing in their search results. The defendants respond that, among other defenses, they’re shielded from liability under Section 230 of the Communications Decency Act, which provides search engines and other interactive computer services with a broad safe harbor from claims relating to information received from others. According to the New York Times, few, if any, other lawsuits have addressed the question raised by Baldino’s suit, perhaps highlighting the quixotic nature of his claims.

Going mobile. As the owner of four of the five most downloaded apps in the Apple iOS App Store and Google Play in October 2014, Facebook is taking the mobile scene by storm. The social media giant now accounts for 20 percent of all the data that flows through mobile phones, thanks in large part to its early-2014 adoption of its “autoplay” feature, which results in a video included in a Facebook user’s newsfeed to automatically start playing unless the user has turned the feature off—more video streams mean more data traffic. Moreover, Facebook’s advertising model has adapted to reflect Internet users’ exodus from their desktop computers; indeed, mobile devices currently account for two-thirds of the company’s advertising revenue.

Trial tweets. A federal district court judge in New York City refused to grant a new trial to lawyers convicted on immigration fraud charges based on the convicts’ claims that a juror’s tweets revealed a bias against them. During the immigration lawyers’ trial, the juror—a “romantic suspense writer”—tweeted things like: “I suppose it’s inappropriate to ask judges, prosecutors and witnesses to talk to your MWA [Mystery Writers of America] chapter after the trial ends?” and “I really like our judge . . . she’s the kind of person I would be interested in talking to.” (One of the tweets even ended with “#juryduty rocks.”) U.S. District Judge Ronnie Abrams held that such tweets didn’t express the juror’s views about the defendants or the strength of the prosecution’s case.

Status Updates

Posted in Status Updates

Search stripped? European regulators have several beefs with Google—the digital giant has been accused of tax avoidance and violations of data protection laws—but right now they’re focused on whether the company, which reportedly controls 90% of the online search market in Europe, is wielding illegal monopolistic power. Based on allegations that Google is manipulating search results to the detriment of its potential competitors, the European Parliament is expected to vote on Dec. 4 on a non-binding resolution to break up Google on the continent.  The parliamentary vote won’t have the force of law, but a vote recommending a Google take-down could influence the European Commission—which does have the power to act—to make demands of the company or to take it to court to force its breakup.  The EU’s top official for digital markets has said that such an outcome is far from inevitable, however.

Toy story. With Black Friday approaching, we’re reminded that, not too long ago, parents, toy manufacturers and retailers had little to go on in seeking to determine what would be the most popular toys over the holiday season. Not so today, thanks to the convergence of big data and social media.  Data analytics companies are delving into the social media universe to identify patterns and look for developing trends. Based on its analysis of hundreds of millions of posts and tweets, one company informs us that the video game “Call of Duty: Advanced Warfighter” will be popular, as will child-friendly versions of adult gadgets like the Vtech Kidizoom Smart Watch and My Friend Cayla.  Another data analytics company says that LeapFrog and Minecraft-related toys will be hot. And all the companies agree that Elsa from the Disney movie Frozen is likely to be as ubiquitous over the winter holidays as she was at Halloween.  So, for those parents who are sick of hearing that Frozen song, just let it go—it’s going to be a long winter for you.

Yik Yak backed. Yik Yak, the messaging app that we recently reported has become a popular means of communicating deeply offensive remarks because of its promise to protect users’ anonymity, has raised $63 million in venture capital in its third round of funding.  As a result, its market valuation is now between $300 million and $400 million.  The backer is Sequoia, the venture capital firm that hit record pay dirt when WhatsApp was sold to Facebook in February of this year. The Yik Yak deal confirms what we’ve been saying here for some time—as consumer privacy concerns continue to grow over traditional social media platforms, there’s a huge demand for new platforms that provide (or at least purport to provide) users with greater anonymity—we’re calling it asocial media.

Mark Your Calendar: Dec. 4th Digital Media Bootcamp for NYC Area Lawyers & Artists

Posted in IP, Online Promotions

The Volunteer Lawyers for the Arts will be presenting an all-day “bootcamp” covering digital media and related legal issues on Thursday, December 4, 2014, at Morrison & Foerster LLP’s New York office. The courses will be directed to both attorneys and artists, and will focus on issues such as online advertising, social media law, interactive media and video games, and current events in digital media. Presenters include Socially Aware contributor Anthony Ramirez of Morrison & Foerster LLP. Attorneys are eligible for up to six CLE credits, and discounted rates are available for artist attendees. To register, please visit http://bit.ly/1y9PTcg.

Status Updates

Posted in Status Updates

Forget me not. Twitter launched just eight years ago with this tweet from company co-founder, Jack Dorsey:

 

 

 

 

 

 

 

(Not nearly as dramatic as “Mr. Watson—come here—I want to see you”— but I digress.)  Since that inaugural tweet, hundreds of billions of tweets have flowed through Twitter’s network, with 500 million new tweets every day. Yet, consistent with Twitter’s eccentric ways (no message over 140 characters, please), there has never been a way to search this massive treasure trove of tweets. Indeed, Twitter didn’t even get around to incorporating search functionality into its platform until 2011 (five years after that first tweet), and that functionality was limited to searching only very recent tweets—there was no way to access tweets more than a week or so old. Enter Twitter’s new search engine, just out this month, allowing users to search tweets new and old. This new functionality is limited to fairly basic keyword searches right now, but Twitter expects to expand it very soon to encompass more flexible and complex queries. In the meanwhile, if you’re gearing up for a job search any time soon, you might want to delete those ill-advised drunken tweets from three years ago.

Dead air. There’s a common view in the tech industry that cutting-edge, transformative business models simply move too quickly for the law to regulate effectively—by the time that the courts get around to addressing the legal issues raised by such a business model, the genie is out of the bottle, the transformation has occurred and any resulting court decisions are too late to have any real impact. But then there’s Aereo. The once high-flying TV-over-the-Internet start-up promised to transform how we access television programming, to the acclaim of cord cutters everywhere (or at least in those carefully selected judicial circuits where Aereo had rolled out its service). And then the U.S. Supreme Court intervened, clipping the company’s wings—in a landmark decision, the court held that Aereo ran afoul of copyright law by engaging in unauthorized public performances of TV programs (our summary of that decision can be found here.)  In a stark reminder that Supreme Court decisions have very real consequences—even for hot start-ups using cool, disruptive technologies—Aereo has now filed for Chapter 11 bankruptcy. Even in defeat, however, Aereo will live on, at least in spirit—it has inspired a new generation of entrepreneurial companies in the TV space, and perhaps has prodded traditional media companies to explore online streaming of their TV programs. And, of course, despite the Supreme Court’s efforts to limit the scope of its ruling, the Aereo decision will be endlessly debated by courts, litigants and copyright scholars for years to come, shaping the future of our media landscape.

This is your refrigerator speaking—you’re low on milk. To date, the Internet of Things (IoT)—which includes digitally connected thermostats, medical devices, refrigerators, toaster ovens, bread boxes, toothbrushes and the like—hasn’t seemed to live up to its hype. But maybe it’s just a matter of time. In a recent report, BI Intelligence predicts that, by 2019, IoT will result in $1.7 trillion in value added to the world’s economy and the total value of IoT devices will be more than double the size of the smartphone, PC, tablet, connected car and the wearable market combined. Perhaps—but, looking into our own crystal ball, we’re skeptical that these massive numbers will be reached in that time frame unless the IoT industry effectively addresses the privacy and data security concerns raised by IoT devices in the home.

Forced to Cyber-Spy: Court Rules Parents Can Be Held Negligent for Child’s Facebook Activity

Posted in Litigation, Terms of Use

Are parents now liable for what their kids post to Facebook?  According to a recent decision in the Georgia Court of Appeals, they are.

The Georgia Court of Appeals held that the parents of a seventh-grade student could be found negligent for failing to ensure that their son deleted an offensive Facebook profile that defamed a fellow classmate.  The fake Facebook account depicted a fat-face caricature of the female student and featured sexual, profane and racist postings.  Facebook eventually took the page down at the urging of the bullied girl’s parents, more than 11 months after the school first disciplined the male student.  According to the court, the failure of the boy’s parents to take any action to get their son to delete the profile for nearly a year after the school alerted them about the Facebook page could constitute negligence.

“Given that the false and offensive statements remained on display, and continued to reach readers, for an additional eleven months, we conclude that a jury could find that the [parents’] negligence proximately caused some part of the injury [the girl] sustained from [the boy’s] actions (and inactions),” the court stated.

The appeals court found that because the boy’s parents made no attempt to view the Facebook page, learn what content their son had distributed or demand that their son delete the page, they could be held negligent for failing to police their son’s social media account.  For this reason, the appeals court reversed the trial court’s decision to grant summary judgment to the boy’s parents.  The court, though, agreed with the lower court’s dismissal with respect to holding the parents responsible for allowing the page to be posted in the first place.

If upheld, this ruling by the Georgia Court of Appeals could usher in a new era of parental responsibility, imposing a significant duty upon parents to monitor their children’s online activity and remedy any problems once they are put on notice.

But will parents be upset about this holding, or welcome it as they seek ways to justify their cyber-spying?  More than 37% of teens own smartphones, and parents are increasingly looking for ways to keep tabs on their kids.  According to the Family Online Safety Institute, 78% of parents have logged into their child’s Facebook account to monitor their private messages.  In 2012, 20 million people had already downloaded Life360, a location app that allows families to track each other’s movements with by-the-minute updates.  According to the co-founder of TeenSafe, an invisible tracking app that allows parents to monitor their kid’s location, social media activity and text messages, more than 500,000 users have used the service to help identify online bullying and keep teens out of dangerous situations.

So the next time a teenager yells at a parent for violating her civil liberties by tracking all of her online activities, the parent can simply point to the Georgia Court of Appeals decision and say they were forced to cyber-spy, for everyone’s protection.

Facebook Dislikes Fake Likes

Posted in Terms of Use

Money may not be able to buy happiness, but it can buy phony Facebook “likes.” And those can go a long way toward making a small business owner’s dreams come true, right?

Wrong, explains Facebook site integrity engineer Matt Jones in a recent post on the company’s official blog.

Businesses that purchase fake likes “won’t achieve results and could end up doing less business on Facebook if the people they’re connected to aren’t real,” Jones observes.

Phony likes don’t help companies to reach their target audiences on Facebook because, for one thing, the creators of phony likes—which usually originate from fake Facebook accounts or real ones that have been hacked into—aren’t actual paying customers with whom the business would benefit from communicating, digital marketing gurus explain.

Nor do phony likes represent people who are likely to be Facebook friends with consumers looking for peer recommendations.

Further, fake likes won’t increase the likelihood that the business purchasing them will reach a relevant wider audience because, according to Jones, the Facebook algorithm that decides when and where to deliver a page’s legitimate ads and content takes page engagement rates into account, and “the people involved [in creating a fake like] are unlikely to engage with a page after liking it initially.”

As one digital marketing blogger notes, “[Q]uantity [is] not the metric that [is] important with Facebook marketing; it’s all about the quality. Having 10,000 fans in India is great, but they’re not going to buy anything or visit you if you’re a furniture store in Sydney, Australia.”

And so, for these reasons, and for the sake of maintaining its own advertising-dependent business model, Facebook is doing all it can to rid the social network of phony likes, reports Jones. The company’s efforts to achieve this end include automated measures such as algorithms that block spam and help Facebook to identify fraudulent activity. The company also asks for verification from accounts with particularly high like activity.

Indeed, Facebook’s recent ban on the practice of “like” gating appears to be part of this same initiative to ensure the legitimacy—and marketing value—of each individual like.

There is one group of businesses for whom bogus likes make economic sense: Those that profit from selling such likes. Pssst—wanna buy a like? For $480, you can reportly purchase 10,000 likes, while $1,200 gets you 50,000 new likes. It’s big business; a 2013 study estimated that fake Facebook activities generate $200 million a year. But Facebook is fighting back.

Jones’s Facebook blog post highlights the nearly $2 billion in legal judgments that the social media platform obtained by filing lawsuits against spammers. The most publicized of those suits concern more traditional spamming—the gaining of unauthorized access to Facebook user accounts for the purpose of sending unsolicited commercial electronic messages. But Facebook has filed at least one suit against a seller of phony likes, and, based on Jones’s statements, one can expect Facebook to commence more such suits in the future.

And while Facebook isn’t likely to see much money from these lawsuits—the defendants often file for bankruptcy or simply disappear—the resulting judgments are likely to deter parties from selling phony likes.

As we’ve recently discussed, the Facebook like has now achieved legal status—as property, as protected speech under the First Amendment and as protected “concerted activity” under the National Labor Relations Act. So it’s not surprising that, with the growing business and legal importance of the like, we’re seeing a greater effort on Facebook’s part to ensure the integrity of the like.

And, if it is to have integrity, a like needs to be earned, not bought.

Status Updates

Posted in Uncategorized

Invisible hits. What could possibly be meant by the following tweet? “CA-40/43-44/49-44/44-50/36-44/49-10/16/14-52–>49/476-10s.” According to a recent CNN report, GOP groups tweeted such seemingly meaningless gibberish in order to communicate key, up-to-the-minute polling data for U.S. House of Representatives races just before the recent midterm elections. Campaign operatives who followed the House races closely could decipher the tweets. So, chalk up a new use for social media – but perhaps a legally dubious one, as some federal election law experts say tweets like these might constitute illegal “coordination” between outside political groups and political campaigns. The Huffington Post reports that Democrats also used similar techniques on Twitter back in 2012. Does communicating such information by hiding it in plain sight on Twitter, which after all is a public forum, violate the law regarding coordination? Election lawyers aren’t sure, and the vice chair of the Federal Election Commission told CNN that this is a “murky” area. Experts doubt that the FEC will actually take enforcement action, but it’s certainly an interesting question, and we’re sure we haven’t seen the end of creative efforts to use social media in campaigns.

Duty now for the future. People often wish to donate documents containing sensitive information to libraries or archives with instructions that the documents not be made publicly available until a specified time in the future.  But it sometimes becomes impossible for the library or archive to comply with such instructions – for example, when the documents are subpoenaed. Jonathan Zittrain, director of the Berkman Center for Internet and Society at Harvard University, recently received a $35,000 grant from the Knight Foundation to develop an encrypted “time capsule” that would make early disclosure impossible. One idea is to use extremely complicated code that today’s computers can’t decipher but that (it is assumed) will be breakable by more advanced computers in the future. Given the unpredictability of technological progress, however, Mr. Zittrain’s  preferred solution is a divided key where several archives possess only  part of the encryption key. The FBI, predictably, isn’t happy with any of these options.

 Know your product. As the holiday shopping season approaches, retailers want to know the best way to reach consumers. One possibility: Twitter. A recent survey conducted for Twitter by a consulting firm indicates that more than half of 2,100 Twitter users ages 13 and up said that a Twitter promotion motivated them buy something they might not otherwise have purchased. Fifty-four percent checked Twitter while shopping – yet another indication that the future of social media is in the mobile sphere. It’s elsewhere been reported that 76 percent of Twitter users take the mobile route. Among the products most often purchased because of Twitter mentions: clothing, shoes, gift certificates, movies, and electronics.

Status Updates

Posted in Status Updates

Commercial free content. Would you pay to diminish the number of ads that appear on your screen while you surf the Web? Google is testing a service that will allow users to do just that. The service, called Contributor, will give visitors to ten web sites that Google has partnered with the opportunity to pay a monthly fee of between $1 and $3 to avoid being subjected to on-screen promotions. In exchange for forking over the funds, a small portion of which will go to Google, readers of content on sites including Mashable and The Onion will see banners thanking them for their patronage in the spots where on-screen advertisements would otherwise appear. According to the New York Times, this isn’t the first time that the tech giant has tested Internet users’ willingness to pay for content, and it probably won’t be the last.

Flying less-than-friendly skies. The bankruptcy-plagued airline industry is finally turning to its customers’ personal information as a source of potential revenue. Airlines are late to the customer-data-mining party because, compared to traditional retailers, airlines need to track their patrons over a much longer time period to get a sense of their spending habits (most people purchase plane tickets a lot less frequently than they buy, for example, coffee). But, faced with ticket prices that barely cover costs, airlines are turning to tech-savvy global distribution service companies for several years’ worth of a customer’s transactions and information gleaned from patrons’ social media profiles and interactions. The airlines hope the information will allow them to deliver more targeted offers to air travelers, but—for frequent flyers—it poses yet another privacy concern. As if turbulence weren’t enough to worry about?