The Federal Trade Commission (FTC) appears to be using its ongoing review of current rules and guides to revisit its approach to driving home the message that the relationship between a social media “influencer” and the brand he or she is endorsing must be disclosed. As we have described previously, the FTC has interpreted its Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”) to require that online advertisements — like all other advertising — clearly and conspicuously disclose material connections between endorsers (i.e., influencers) and the brands they promote because such connections may affect the credibility of the endorsement. And, in recent years, the FTC has — through enforcement actions, press releases, guidance, closing letters, and letters sent directly to endorsers (including prominent public figures) — made clear its belief that: (1) appropriate disclosures by influencers are essential to protecting consumers; and (2) in too many instances, such disclosures are absent from celebrity or other influencer endorsements.

Now, in connection with a request for comments on the Endorsement Guides, FTC Commissioner Rohit Chopra has issued a scathing statement calling on the FTC to “take bold steps to safeguard our digital economy from lies, distortions, and disinformation.” In this regard, Commissioner Chopra suggests that the FTC’s efforts to date have not been effective in “deterring misconduct in the marketplace” relating to inauthentic and fake reviews, and that, in particular, elements of the Endorsement Guides should be codified as formal rules so that violators can be liable for civil penalties and damages under the FTC Act.

Also of note is that Commissioner Chopra has asserted that the FTC should refocus its efforts on advertisers themselves, and not the influencers that promote their brands.  According to the Commissioner, “when companies launder advertising by paying someone for a seemingly authentic endorsement or review, this is illegal payola,” and “companies paying for undisclosed influencer endorsements and reviews are not [being] held fully accountable for this illegal activity.” Seeking to aggressively penalize advertisers themselves would be a shift in emphasis for the FTC, as its recent efforts to combat inadequate disclosures in influencer advertising have focused on influencers. For example, the FTC recently produced a brochure detailing the responsibility of influencers “to make [required] disclosures, to be familiar with the Endorsement Guides, and to comply with laws against deceptive ads.” The FTC also brought an enforcement action against influencers, and foreshadowed that more enforcement will happen in the future.


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In a landmark ruling, the European Court of Justice—Europe’s highest court—dealt Google a clear win by placing a territorial limit on the “right to be forgotten” in the EU. The court’s holding in Google v. Commission nationale de l’informatique et des libertés (CNIL) clarifies that a search engine operator that is obligated to honor an individual’s request for erasure by “de-referencing” links to his or her personal data (i.e., removing links to web pages containing that personal data from search results) is only required, under the GDPR, to de-reference results on its EU domains (e.g., google.fr in France and google.it in Italy), and not on all of its domains globally.

However, in the same ruling, the Court also stated that the GDPR applies to Google’s data processing on all of its domains globally (by virtue of such processing comprising “a single act of processing”). Therefore, an EU Member State’s supervisory authority and courts are free to treat the ECJ’s EU-wide de-referencing requirement as a “floor” and go one step further, requiring search engines to implement the right to be forgotten on all of its domains worldwide, including those outside the EU.

Background – The Right to Be Forgotten

The right to be forgotten—codified at Article 17 of the GDPR—grants individuals the right to obtain erasure of their personal data without undue delay, where, for example, the data are no longer necessary for the purpose for which they were collected or processed. However, the right is not unlimited; exceptions apply if the processing is deemed necessary for the exercise of freedom of expression, compliance with a legal obligation, public interests such as public health, scientific or historic research, or the establishment or defense of legal claims.
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In just over a week, on October 1, 2019, key amendments to Nevada’s online privacy law will take effect. We previously detailed the amendments here. In brief:

  • Consumers have the right to opt out of the sale of their personal information. The law gives Nevada consumers the right to request that website operators refrain

A recent decision from the Ninth Circuit Court of Appeals in a dispute between LinkedIn and hiQ Labs has spotlighted the thorny legal issues involved in unauthorized web scraping of data from public websites. While some may interpret the LinkedIn decision as greenlighting such activity, this would be a mistake. On close review of the decision, and in light of other decisions that have held unauthorized web scrapers liable, the conduct remains vulnerable to legal challenge.

hiQ and LinkedIn

Founded in 2012, hiQ is a data analytics company that uses automated bots to scrape information from LinkedIn’s website. hiQ targets the information that users have made public for all to see in their LinkedIn profile. hiQ pays nothing to LinkedIn for the data, which it uses, along with its own predictive algorithm, to yield “people analytics,” which it then sells to clients.

In May 2017, LinkedIn sent a cease-and-desist letter to hiQ demanding that it stop accessing and copying data from LinkedIn’s servers. LinkedIn also implemented technical measures to prevent hiQ from accessing the site, which hiQ circumvented.

Shortly thereafter, with its entire business model under threat, hiQ filed suit in the United States District Court for the Northern District of California seeking injunctive relief and a declaration that LinkedIn had no right to prevent it from accessing public LinkedIn member profiles.
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Advancements in technology appear to have spurred the Federal Trade Commission to initiate a review of its rule promulgated pursuant to the Children’s Online Privacy Protection Act (the “COPPA Rule” or “Rule”) four years ahead of schedule. Last week, the FTC published a Federal Register notice seeking comments on the Rule. Although the FTC typically reviews a rule only once every 10 years and the last COPPA Rule review ended in 2013, the Commission unanimously voted 5-0 to seek comments ahead of its next scheduled review. The Commission cited the education technology sector, voice-enabled connected devices, and general audience platforms hosting third-party, child-directed content as developments warranting reexamination of the Rule at this time.

Background

The COPPA Rule, which first went into effect in 2000, generally requires operators of online services to obtain verifiable parental consent before collecting personal information from children under the age of 13.  In 2013, the FTC amended the COPPA Rule to address changes in the way children use and access the internet, including through the increased use of mobile devices and social networking.  Its amendments included the expansion of the definition of “personal information” to include persistent identifiers that track online activity, geolocation information, photos, videos, and audio recordings. The new review could result in similarly significant amendments.

Questions for Public Comment

In addition to standard questions about the effectiveness of the COPPA Rule and whether it should be retained, eliminated, or modified, the FTC is seeking comment on all major provisions of the Rule, including its definitions, notice and parental consent requirements, exceptions, and security requirements.
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Nevada just joined California as the second state to enact an opt-out right for consumers from the “sale” of their personal information. Senate Bill 220, which was signed into law on May 29, 2019, is scheduled to take effect on October 1, 2019, three months prior to its precursor under the California Consumer Protection Act (the CCPA). The opt-out right is one of several changes made to Nevada’s existing online privacy law, which requires operators of commercial websites and other online services to post a privacy policy. In addition to the new opt-out right, the revised law exempts from its requirements certain financial institutions, HIPAA-covered entities, and motor vehicle businesses.
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A federal district court in California has added to the small body of case law addressing whether it’s permissible for one party to use another party’s trademark as a hashtag. The court held that, for several reasons, the 9th Circuit’s nominative fair use analysis did not cover one company’s use of another company’s trademarks as

One of the next big items in Europe will be the expansion of “ePrivacy,” (which, among other things, regulates the use of cookies on websites). While the ePrivacy reform is still being worked on by EU lawmakers, one of the items the ePrivacy Regulation is expected to update is the use of “cookie walls.” Recently, the Austrian and UK data protection authorities (DPAs) issued enforcement actions involving the use of cookie walls, albeit with different findings and conclusions.

Cookie Walls

A cookie wall blocks individuals from accessing a website unless they first accept the use of cookies and similar technologies. The practice of using cookie walls is not prohibited under the current ePrivacy Directive.

However, the European Data Protection Board (EDPB), the successor to the Article 29 Working Party, has issued a non-binding opinion that the use of cookie walls should be prohibited under new EU ePrivacy rules. The EDPB argues that cookie walls run contrary to the General Data Protection Regulation (GDPR): “In order for consent to be freely given as required by the GDPR, access to services and functionalities must not be made conditional on the consent of a user to the processing of personal data or the processing of information related to or processed by the terminal equipment of end-users, meaning that cookie walls should be explicitly prohibited.”


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As close observers of the implications of privacy law on companies’ data collection, usage and disclosure practices, we at Socially Aware were among the many tech-law enthusiasts anticipating the U.S. Supreme Court’s recent decision in Carpenter v. United States, in which the Court held that the government must obtain a warrant to acquire customer location information maintained by cellular service providers, at least where that information covers a period of a week or more.

Authored by Chief Justice John Roberts, the 5-4 opinion immediately enshrines greater protections for certain forms of location data assembled by third parties. It also represents the Court’s growing discomfort with the so-called “third-party doctrine”—a line of cases holding that a person does not have a reasonable expectation of privacy in records that he or she voluntarily discloses to a third party. In the longer run, there will likely be further litigation over whether the same logic should extend Fourth Amendment protections to other types of sensitive information in the hands of third parties as courts grapple with applying these principles in the digital age.

Background

Anytime a cell phone uses its network, it must connect to the network through a “cell site.” Whenever cell sites make a connection, they create and record Cell Site Location Information (CSLI). Cell phones may create hundreds of data points in a normal day, and providers collect and store CSLI to spot weak coverage areas and perform other business functions.
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Companies that offer services, whether online or offline, to consumers on a subscription or other automatic renewal basis should be aware that such offers are heavily regulated at both the federal and state levels. A recent amendment to Section 17602 of California’s Business and Professions Code provides a good opportunity for businesses that make subscription offers to review their practices. As of July 1, 2018, the obligations under California law will expand in two ways that may require businesses to update those practices.

The first change relates to the information that businesses must provide to consumers regarding the terms of a subscription offer. The current law already requires a business to provide certain information about the renewal process—such as the amount of the recurring charges, the length of the renewal period, and the cancellation policy—both before the consumer accepts the agreement, and afterwards in an acknowledgement. The amendment provides that, as of July 1, 2018, if the offer includes any free trial or gift component, the information provided to consumers must also include a “clear and conspicuous explanation of the price that will be charged after the trial ends or the manner in which the subscription or purchasing agreement pricing will change upon conclusion of the trial.”
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