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Social media is all about innovation, so it is no surprise that social media marketers are always looking for innovative ways—such as courting social media “influencers” and using native advertising—to promote products and services to customers and potential customers. But, as the retailer Lord & Taylor recently learned, the legal rules that govern traditional

brand advertising word cloud

“Native advertising”—ads that may blur the distinction between advertising and editorial, video or other content—has been a hot topic in recent years for both marketers and regulators. It is popular with marketers because it is apparently an effective advertising model. The Federal Trade Commission (FTC), on the other hand, contends that it may be deceptive

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Cross-device tracking is a hot new issue for regulators. Companies engaged in the practice should take note of two recent developments. On November 16, 2015, the Federal Trade Commission (FTC) hosted a workshop on the issue and, perhaps not coincidentally, on the same day the Digital Advertising Alliance (DAA) addressed the applicability of its interest-based

Federal Trade Commission Doorway Sign

In December 2014, we noted that the Federal Trade Commission’s (FTC) settlement with advertising firm Deutsch LA, Inc. was a clear signal to companies that advertise through social media that they need to comply with the disclosure requirements of Section 5 of the FTC Act. On September 2, 2015, the FTC announced a settlement along

As more users spend more time on their mobile devices, advertising dollars are following. And the compliance regime that governs interest-based advertising (IBA) (formerly referred to as online behavioral advertising or OBA) is expanding as well. (IBA is the collection of information about users’ online activities across different websites or mobile applications, over time, for

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

Snapchat’s recent settlement with the Federal Trade Commission (FTC) generally provides a comprehensive but not groundbreaking roadmap to the FTC’s privacy and data security expectations in the mobile environment under Section 5 of the FTC Act, with two very notable exceptions:

  1. It now appears that companies are required to follow researchers’ blogs and other writings to see if there are any privacy or data security vulnerabilities, and to act on any such information promptly; and
  2. It also appears that the FTC expects companies to be aware of all third parties who have technology that can interact with an app, and to make sure that when consumers engage in any such interaction, all of the company’s privacy and data security representations remain true. If the FTC continues down this path, it will create unsustainable new burdens on app developers, many of which have very few resources to begin with. Furthermore, if this is the new standard, there is no reason it should be limited to the app environment—analytically, this would lead to a rule of general application.

THE BASIC ALLEGED MISREPRESENTATION

The Snapchat app became very popular because of its branding as an “ephemeral” mobile messaging service. Among other things, the app promised its users and prominently represented—in its privacy policy and an FAQ, among other places—that the “snaps” (e.g., messages) users sent would “disappea[r] forever” after 10 seconds (or less). However, according to the FTC’s complaint, in addition to other problems with the app’s privacy and security features, it was much too easy to capture these supposedly ephemeral messages, making the company’s claims false and misleading in violation of Section 5. And since the company’s representations were not consistent with the app’s practices, now it’s the FTC that won’t be disappearing any time soon.
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The Federal Trade Commission’s (FTC) announcement that it had filed a complaint against Jerk, LLC and its websites like “jerk.com” (“Jerk”) looks at first glance like a run-of-the-mill FTC Section 5 enforcement action involving allegedly deceptive practices online. But hidden in the facts of Jerk’s alleged misbehavior is a potentially significant expansion of the FTC’s use of its deception authority.

According to the FTC’s complaint, Jerk allegedly led consumers to believe that the profiles on its websites were created by other users of the website. The company also allegedly sold “memberships” for $30 a month that supposedly included features that would enable consumers to alter or delete their profiles, or to dispute false information in the profiles. Jerk also charged consumers a $25 fee to email Jerk’s customer service department, according to the FTC’s complaint.

The FTC alleges that Jerk created between 73.4 million and 81.6 million unique consumer profiles primarily using information such as names and photos pulled from Facebook through application programming interfaces, or APIs. The complaint states that “[d]evelopers that use the Facebook platform must agree to Facebook’s policies,” such as obtaining users’ explicit consent to share certain Facebook data and deleting information obtained from Facebook upon a consumer’s request.
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Cisco estimates that 25 billion devices will be connected in the Internet of Things (IoT) by 2015, and 50 billion by 2020. Analyst firm IDC makes an even bolder prediction: 212 billion connected devices by 2020. This massive increase in connectedness will drive a wave of innovation and could generate up to $19 trillion in savings over the next decade, according to Cisco’s estimates.

In the first part of this two-part post, we examined the development of, and practical challenges facing businesses implementing, IoT solutions. In this second part, we will look at the likely legal and regulatory issues associated with the IoT, especially from an EU and U.S. perspective.

The Issues

In the new world of the IoT, the problem is, in many cases, the old problem squared. Contractually, the explosion of devices and platforms will create the need for a web of inter-dependent providers and alliances, with consequent issues such as liability, intellectual property ownership and compliance with consumer protection regulations.
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