United States: Social Media And Online Advertising: What You Keep And Don’t Disclose Can Hurt You

Last Updated: May 8 2013
Article by John R. Gotaskie, Jr.

ACC America Western PA Chapter FOCUS Newsletter

Second Quarter 2011

Recently, the blogosphere has been all "atwitter" regarding the fact that, unbeknownst to the consumer, Apple Computer has been capturing location data from iPhones and iPads — meaning, if your employees and customers have these devices, Apple knows precisely where they have been. The captured location data is stored on an iPhone or iPad for up to one year and is uploaded to Apple's servers every time a user syncs the device with iTunes.

Apple has come under considerable criticism for this practice both in the media as well as in Congress. It has become something of an embarrassment for Apple, which is considered one of the leading online technology companies. So what went wrong? And what are the lessons for in-house counsel and their companies? Have you taken every reasonable step to protect your organization with regard to online data tracking and collection activities? If not, the risks of having incomplete policies and noncompliant practices could be substantial, including a loss of consumer confidence in your brand, investigations from state and federal authorities — including Congressional subpoenas, one of the broadest possible law enforcement tools — and lawsuits from those aggrieved. Sony, for example, recently was forced to shut down its Play Station online gaming network for several weeks and respond to inquires from Congress after its security systems, including those that retain sensitive customer data collected online, were breached.

For Apple, the essential issue is that it was capturing and storing data from users' devices without receiving prior consent or at a minimum, informing users of the practice. In today's online advertising and social media world, consumers are often willing to allow the capture and use of location information if the data collection efforts and how such data will be used are disclosed. In this instance, Apple failed its customers on both counts.

Perhaps because many of Apple's users expect location information will be used to enhance their online experience, most consumers do not seem to be as bothered as one might expect from this "Big Brother" experience. For example, social apps such as Twitter, Foursquare, Living Social and Groupon all use the location features of Apple's PDAs to provide a richer consumer experience.

The larger issue, however, is what happens with such stored personal information once it is available in the public sphere. Within the last month, Google, Sony and Apple have all come under fire for the capture, and occasional disclosure, of sensitive personal information. These events may provide impetus for the Federal Trade Commission's efforts to regulate online advertising and for Congress to consider additional laws.

In 2009, the FTC issued its "Principles for Online Behavioral Advertising," a practice it distinguished from "First Party Behavioral Advertising" and "Contextual Advertising." First-Party Behavioral Advertising is conducted by an entity and at a single web site (e.g., a banner or pop-up advertisement seen by an individual consumer at a particular web site). Because this advertising does not involve tracking, the FTC concluded it is likely to be consistent with consumer expectations and thus less likely than Online Behavioral Advertising to lead to consumer harm.

Contextual Advertising is based on a consumer's visit to a single web page or in response to a single search query that involves no retention of data about the consumer's online activities other than those necessary for the immediate delivery of an advertisement. Think of the paid links at the top of a Google search results page. Because of its limited concerns regarding consumer tracking from Contextual Advertising, the FTC concluded its principles did not need to cover contextual advertising.

The FTC's principles for Online Behavioral Advertising, published in 2009, were a result of work the FTC began in 1995 when the Internet was in its infancy. It involved a number of interim reports and studies, a two-day town hall meeting in November 2007 and comments from 63 different stakeholders, including companies, business advocacy groups such as the Chamber of Commerce, academics, consumer and privacy advocates and individual consumers. From the meetings and discussions coordinated by the FTC, four principles emerged: (1) transparency and consumer control; (2) reasonable security and limited data retention for consumer data; (3) affirmative express consent for material changes to existing privacy promises; and (4) affirmative express consent to using sensitive data for behavioral advertising. The main points involve transparency — that is, ensuring the consumer understands to what he or she agreed with regard to any tracking of web or other online activities through apps or other tools — along with affirmative express consent — meaning the FTC wants consumers to be able to "opt-in" to tracking services.

The advertising, Internet and computer industries have taken a slightly different approach. In response to the publication of the FTC principles, a cadre of five different industry groups issued its own set of seven self-regulatory principles for Online Behavioral Advertising: (1) education; (2) transparency; (3) consumer control; (4) data security; (5) notice of material changes; (6) sensitive data protection; and (7) accountability. The most significant difference between the FTC and industry approaches is that the third and fourth FTC principles, affirmative consent, are notably absent from the industry regime. The industry regime, in other words, contemplates full disclosure just as the FTC does, but wants consumers to "opt-out" from rather than "opt-in" to tracking.

So what does this mean for you? The FTC is continuing to closely monitor online tracking and data retention activities, including traditional web-based advertising and searching as well as apps and the activities that companies such as Apple, Google and Foursquare are doing with location-based services. Additionally, especially in light of the Apple and Google experiences in the last several months, both Houses of Congress have announced committee investigations and will hold hearings regarding online privacy concerns this summer. Given this challenging regulatory and possibly changing legal environment, along with the coming presidential and congressional election cycle, companies need to be especially cautious. The single most important thing companies can do today is review their online data tracking and retention policies to ensure they are fully disclosing all types of data they are collecting, telling consumers what they are doing with such data and ensuring the data is protected as carefully as possible. While this seems like common sense, the recent experiences of Sony and Apple demonstrate how damaging this situation can be for companies and how they can leave fertile ground for laws and regulations that further suppress innovation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
John R. Gotaskie, Jr.
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions