Photo of Julie O'Neill

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

Magnifying2In a new report, the Federal Trade Commission (FTC) declines to call for new laws but makes clear that it will continue to use its existing tools it to aggressively police unfair, deceptive—or otherwise illegal—uses of big data. Businesses that conduct big data analytics, or that use the results of such analysis, should familiarize themselves with the report to help ensure that their practices do not raise issues.

The report, titled “Big Data: A Tool for Inclusion or Exclusion? Understanding the Issues” grew out of a 2014 FTC workshop that brought together stakeholders to discuss big data’s potential to both create opportunities for consumers and discriminate against them. The Report aims to educate businesses on key laws, and also outlines concrete steps that businesses can take to maximize the benefits of big data while avoiding potentially exclusionary or discriminatory outcomes.

What Is “Big Data”?

The Report explains that “big data” arises from a confluence of factors, including the nearly ubiquitous collection of consumer data from a variety of sources, the plummeting cost of data storage, and powerful new capabilities of drawing connections and making inferences and predictions from collected data. The Report describes the life cycle of big data as involving four phases:

  • Collection: Little bits of data are collected about individual consumers from a variety of sources, such as online shopping, cross-device tracking, online cookies or the Internet of Things (i.e., connected products or services).
  • Compilation and Consolidation: The “little” data is compiled and consolidated into “big” data, often by data brokers who build profiles about individual consumers.
  • Data Mining and Analytics: The “big” data is analyzed to uncover patterns of past consumer behavior or predict future consumer behavior.
  • Use: Once analyzed, big data is used by companies to enhance the development of new products, individualize their marketing, and target potential consumers.

The Report focuses on the final phase of the life cycle: the use of big data. It explores how consumers may be both helped and harmed by companies’ use of big data.

Benefits and Risks of Big Data

The Report emphasizes that, from a policy perspective, big data can provide significant opportunities for social improvements: big data can help target educational, credit, health care, and employment opportunities to low-income and underserved communities.  For instance, the Report notes that big data is already being used to benefit underserved communities, such as by providing access to credit using nontraditional methods to establish creditworthiness, tailoring health care to individual patients’ characteristics, and increasing equal access to employment to hire more diverse workforces.
Continue Reading

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

Word Cloud with Influence related tags

In an age of explosive growth for social media and declining TV viewership numbers, companies are partnering with so-called “influencers” to help the companies grow their brands. Popular users of Instagram, Vine, YouTube and other social media sites have gained celebrity status, generating millions of views, impressions and “likes” with every upload.

Capitalizing on the shift from traditional media to online platforms, advertisers have begun to engage influencers in marketing campaigns. In a May 2015 study, 84% of marketers said they expect to launch at least one influencer marketing campaign in the next 12 months. Of those who had already done so, 81% said influencer engagement was effective. In a separate study, 22% of marketers rated influencer marketing as the fastest-growing online customer-acquisition method.

So what is an influencer, anyway? By its broadest definition, an influencer is any person who has influence over the ideas and behaviors of others. When it comes to social media, an influencer could be someone with millions of followers or a user with just a few loyal subscribers. One thing that all influencers seem to have in common is that their audiences trust them. As such, influencers can be powerful advocates, lending credibility, increasing engagement and ultimately driving consumer actions.

Influencer marketing can be an effective tool, but it’s important to do right. As recent Federal Trade Commission (FTC) and Food and Drug Administration (FDA) investigations demonstrate, online advertising is an area of relatively active enforcement, and influencer marketing presents a number of potential legal issues. The following tips can help companies lead successful influencer marketing campaigns while lessening the risk of liability.

Disclosure Is Key

In September, the FTC settled a case with Machinima, a company that paid popular video bloggers to promote Microsoft’s Xbox One system through YouTube. Despite the hefty sums paid out to the gamers (one of whom pocketed $30,000), Machinima did not require them to make any disclosures. The FTC alleged that the failure to disclose the relationship between Machinima and the gamers was deceptive, in violation of Section 5 of the FTC Act. In its Endorsement Guides, the FTC has taken the position that a failure to disclose unexpected material connections between companies and the individuals who endorse them is deceptive.

This case raises two important questions: (1) when is a disclosure required and (2) what constitutes adequate disclosure?
Continue Reading

Woman using multiple devices phone laptop and tablet lying in a wood bench in a park

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

California State on vector technology pattern BackgroundLast week was a big one for California’s privacy regime.

In a landmark move, Governor Jerry Brown signed into law four bills further protecting Californians’ privacy rights: Three strengthen the state’s data breach notification statute and impose restrictions on operators of automated license plate recognition systems (ALPRs), and one requires law enforcement to obtain a

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

Cell_iStock_000024872497XLargeOn July 10, 2015, the Federal Communications Commission (FCC) released a 140-page Omnibus Declaratory Ruling and Order in response to more than two dozen petitions from businesses, attorneys general, and consumers seeking clarity on how the FCC interprets the Telephone Consumer Protection Act (TCPA). As noted in vigorous dissents by Commissioners Pai and O’Rielly,

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