“Hi this is Sara, I’m calling with important information about your credit card. Nothing is wrong, but you are eligible for a great opportunity. Stay on the line or press one for more information.”

If you have a working telephone, you have probably received a call just like this or one of a similar nature. Assuming you didn’t hang up immediately, you pressed one to try and speak with a human to get your number taken off their list. And you most likely were met with a “click” signaling that they had hung up on you, rather than taken you off their list.

Free cruises, important information about your credit card, debt collection, calls from the IRS, warnings about a computer virus, and a whole litany of other enticing robocalls are increasing–despite their illegality. In April alone there were 2.5 billion robocalls placed in the U.S.

The FCC defines robocalls as unsolicited, pre-recorded messages that are placed without written or verbal consent. Exceptions are information about flight changes and school closings.

So, if they’re illegal, why are they still happening? The first reason is the ease with which they can be placed. According to the FCC, new technology allows these scammers to use inexpensive autodial technology to call hundreds of numbers a minute, whether they are on the Do Not Call list or not.

Do you want to know how to stop unwanted calls? Read these #FCCtips to #StopRobocalls: https://t.co/kkwwqxlOVK #ProtectingConsumers

— The FCC (@FCC) May 10, 2017

Even though robocalls are difficult to stop, a new string of lawsuits are aiming to curb this problem.

In January, the FTC filed two suits, FTC v. Justin Ramsey, et al. and FTC v. Aaron Michael Jones, et al., against two of the biggest perpetrators of robocalling. Many of the defendants have agreed to a settlement that includes a permanent ban on robocalling in the future, an agreement to never help others to place robocalls, a promise to stop calling numbers listed on the Do Not Call list, and paying a settlement to the FTC of over $500,000. 

In 2012 Grant Birchmeier and Stephen Parkes filed a class-action lawsuit against Caribbean Cruise Line, claiming that the company illegally contacted them and others on multiple occasions. The settlement resulted in Caribbean Cruise Line agreeing to pay up to $500 a call to those who received calls between August 2011 to August 2012.

Unfortunately, these fines and lawsuits are hardly threatening. One scam that pretended to be the IRS, was able to swindle $26.5 million from about 5,000 people, according to the (real) IRS. Telephone companies are working on new technology to block robocalls. But while those are still experiencing some hiccups, there are some preventative measures you can take.

First, don’t answer unfamiliar calls. If someone really wants to get in contact with you, they can leave a message. Most robocallers are testing your number to see if there is a real person at the other end. Not answering prevents them from getting that knowledge. Once they do know there is someone there, that number gets passed around to more and more robocall centers.

If you get any calls like this, submit the suspicious numbers to the FTC at this link: https://complaints.donotcall.gov/complaint/complaintcheck.aspx. Furthermore, you should put yourself on the Do Not Call list. Being on this list won’t prevent all calls from scammers, but it will cut down on some. Here is the link: https://www.donotcall.gov/

You can register for the National Do-Not-Call list at https://t.co/ZeZdjVjejK, by phone 1-888-382-1222 or TTY 1-866-290-4236. #FCC101

— The FCC (@FCC) May 10, 2017

 Finally, never give your bank account information or credit card information over the phone to a stranger. No matter what scare tactics they use (telling you you’re being sued for fraud, telling you your computer has a virus, etc.) do not give them your personal information. It’s always best to hang up and verify that what they are saying is true.

For the near future, it looks like we will be plagued by robocalls. But if you follow these steps, you’re on the way to stopping them.

Anne Grae Martin

Anne Grae Martin is a member of the class of 2017 University of Delaware. She is majoring in English Professional Writing and minoring in French and Spanish. When she’s not writing for Law Street, Anne Grae loves doing yoga, cooking, and correcting her friends’ grammar mistakes. Contact Anne Grae at staff@LawStreetMedia.com.

The post The Problem with Robocalling–And How to Stop It appeared first on Law Street.

The Federal Trade Commission means business when it comes to regulating Instagram advertisements.

The consumer rights advocacy group Public Citizen recently complained celebrities weren’t being upfront about which of their posts were sponsored. So, the FTC responded by reviewing the photos and sending warning letters to more than 90 Instagram users. The commission has discussed its standards for advertising on social media before, but has not directly confronted the celebrities named in complaints until now.

Public Citizen wasn’t alone in its push to make sponsored content more transparent—this past summer, the nonprofit Truth in Advertising filed a complaint against the Kardashian family for “deceptive marketing.” Though the FTC won’t name which celebrities received the letters, Public Citizen also included the Kardashians in its petition, in addition to well-known Instagrammers like Rihanna, Michael Phelps, Chris Pratt, Jennifer Lopez, Lindsay Lohan, Lebron James, Drake, Mark Wahlberg, and Blake Lively.

The 113 photos Public Citizen referenced in its complaint usually show the celebrities using a product from the brand that has paid them, with an accompanying caption endorsing it. Products range from makeup and hair care from companies like L’Oreal to athletic gear from Nike and Adidas to snacks from Lay’s and Dunkin’ Donuts.

According to a release on the FTC’s website:

The FTC’s Endorsement Guides provide that if there is a ‘material connection’ between an endorser and an advertiser – in other words, a connection that might affect the weight or credibility that consumers give the endorsement – that connection should be clearly and conspicuously disclosed, unless it is already clear from the context of the communication. A material connection could be a business or family relationship, monetary payment, or the gift of a free product. Importantly, the Endorsement Guides apply to both marketers and endorsers.

The release adds that Instagrammers should be clear that their post is an ad within the first three lines of the photo caption, and should avoid writing too many hashtags that could bury disclaimers. The use of hashtags and captions like “#sp” (short for “sponsored”), “Thanks [Brand],” or “partner” do not directly communicate that the post is sponsored and can confuse followers, the FTC says.

In its Endorsement Guides, the FTC writes that ads should be “honest and not misleading”—and consumers should know when they’re reading an endorsement that has been paid-for, because it can affect the way they “[evaluate] the endorser’s glowing recommendation.”

This doesn’t mean your favorite actors, athletes and reality stars are headed to court or getting banned from Instagram anytime soon. Often, it’s the sponsor behind the post that ends up taking the heat for its sneaky ad campaigns. In July, Warner Bros. settled charges that it failed to disclose information about paying “influencers,” like Youtube star PewDiePie, to recommend one of its video games. In March, the department store Lord & Taylor settled charges over its failure to inform consumers that it had sent popular Instagram users free clothing in exchange for promotion of one of its clothing lines.

Victoria Sheridan

Victoria is an editorial intern at Law Street. She is a senior journalism major and French minor at George Washington University. She’s also an editor at GW’s student newspaper, The Hatchet. In her free time, she is either traveling or planning her next trip abroad. Contact Victoria at VSheridan@LawStreetMedia.com.

The post The FTC Isn’t Kidding About Instagram Ads appeared first on Law Street.

The federal government is cracking down on the labeling of homeopathic remedies. The Federal Trade Commission (FTC) is going to require that producers of homeopathic remedies either present science to show that their products work, or label them in a way that makes it clear that there’s “no scientific evidence that the product works.”

The homeopathic market in the United States is near $3 billion annually, but there’s no actual evidence that most of these kinds of treatments work–it’s a sort of pseudoscience. Homeopathy is based on the concept that “like cures like”–essentially if you’re sick you should take or use something that mirrors your symptoms and your body will cure itself. So, if you’re itchy, you might take some version of poison ivy. And while this new regulation won’t mean that homeopathic remedies like the St. Ignatius bean (used for anxiety) and St. John’s wort (used for pain) will disappear from shelves, the hope is that it will become clearer to the people who turn to them that they’re not actually really doing much.

According to the FTC:

Homeopathy, which dates back to the late-eighteenth century, is based on the view that disease symptoms can be treated by minute doses of substances that produce similar symptoms when provided in larger doses to healthy people.

Many homeopathic products are diluted to such an extent that they no longer contain detectable levels of the initial substance. In general, homeopathic product claims are not based on modern scientific methods and are not accepted by modern medical experts, but homeopathy nevertheless has many adherents.

To be fair, these new warnings may not change much. People who use homeopathy usually do so based on a true belief that the science is correct, regardless of the evidence. But for those who walk into a drug store, see homeopathic remedies, and assume that they’re effective because they’re sold alongside real medicine, these labels could make a difference.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Homeopathic Treatments Will Now Need to Disclose if They’re BS appeared first on Law Street.

Have you ever scrolled though your Instagram feed and stopped on an image of one of the Kardashian/Jenner sisters (yes, it’s ok to admit that you follow one, if not all of them) posing with some new fit tea, hair pill, or waist trainer? Was the photo perhaps missing a clearly visible sponsored content label?

Chances are your answers to both of these questions are yes, which is why the famous celebrity clan has been warned that if they don’t remedy their deceptive advertising practices in a week, a formal complaint will be filed with the FTC.

Even the government is no fan of the Kardashians’ detox tea ads on Instagram https://t.co/YAqyvFxO1s pic.twitter.com/ydRfwxMeaM

— Her Campus (@HerCampus) August 7, 2016

On August 17, Truth in Advertising.org sent the family’s matriarch/mom-ager, Kris Jenner, and 27 companies–including Puma, Calvin Klein, JetSmarter, Fit Tea, LuMee, and Balmain–a letter notifying them about the deceptive marketing campaigns. The nonprofit reviewed accounts for Kim, Khloe, Kourtney, Kylie, and Kendall, and found “a plethora of posts that do not clearly or conspicuously disclose their relationships with the companies being promoted in the posts as is required by federal law.”

TINA.org writes:

We intend to notify the Federal Trade Commission that these individuals and companies are engaged in deceptive marketing campaigns unless, by August 24, 2016, the issues described above are fully corrected by clearly and conspicuously disclosing that all applicable posts – past, present, and future – are paid advertisements or the result of material connections between the Kardashian/Jenner individuals and the companies featured in the posts.

Read TINA.org’s letter to the Kardashian-Jenner family here.

The sisters, who have a combined Instagram following of more than 316 million, reportedly make an upwards of $300,000 per sponsored post. According to TINA.org, youngest sister Kylie had the most problem posts, followed by Kim. Also, Puma, with which Kylie has an endorsement deal, lead all companies in improperly marked paid content with 13 posts.

While the girls have occasionally used tags such as #sp and #spon to mark their sponsored posts, the FTC told Bloomberg the subtle disclaimer isn’t enough. Using the hashtag #ad is okay, but only if it’s at the beginning of a post.

Since receiving the letter, the Kardashian-Jenners have already begun retroactively amending posts to contain #ad at the end. However,  since the number of impressions garnered on a post significantly decreases after the initial posting, this remedy may be a waste of time. On August 24 it will be interesting to see if TINA.org is satisfied with changes, or if the group decides to move forward with filing an official FTC complaint.

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

The post Truth in Advertising Org Threatens to Report Kardashian/Jenner Family to FTC appeared first on Law Street.

Have you ever gone to check out of your hotel room, maybe after a nice relaxing vacation, only to discover that there are “resort fees” that you owe? Resort fees can include things like use of the pool, wi-fi, housekeeping, or “complimentary” breakfast. But they usually aren’t advertised up front, so these fees come as an unpleasant surprise to the guests when they try to check out. But, if Federal Trade Commission (FTC) Chairwoman Edith Ramirez gets her way, Congress will do something to protect consumers from these tricky hidden fees.

Ramirez wrote a letter to 10 members of Congress, asking for them to draft legislation to prevent hotels from charging these expensive, and hidden fees. She specifically targeted representatives who had previously spoken out against the fees. Last year Senator Chuck Grassley (R-Iowa) called on the FTC to investigate online hotel booking sites and the hidden fees they may have that “push the price of the hotel room beyond what the actual hotel would charge.” Senators Claire McCaskill (D-Missouri) and Bob Casey (D-Pennsylvania)  have also encouraged the FTC to look into these fees. Right now, the FTC looks into each allegation individually, on a case-by-case basis, and has warned different hotels that their hidden fees may “violate the law” in the past.

A study by a non-profit consumer advocacy group called Travelers United recently found that these kinds of fees have been increasing in California, with “nearly 200 hotels in California charging an average mandatory resort fee of $17 per night.”  However, a hotel trade group, the American Hotel and Lodging Association, has stated that the number of hotels that charge these fees is on a decline overall. Rosanna Maietta, a spokeswoman for the group, stated:

The lodging industry provides guests full disclosure for resort fees charged upfront. Those fees, in addition to the base travel and hotel charges, remain transparent whether consumers book online or with the hotel directly.

However, that hasn’t stopped people from getting surprised with resort fees, and many Americans believe that fees should be disclosed before guests book anything. A poll commissioned by Travelers United found that 80 percent of respondents want resort fees included in advertised pricing, and 87 percent would be less likely to stay at a hotel if they were charged fees for amenities they did not use or want.

Whether Congress will actually take action will be interesting to watch–given that a few congresspeople have already been talking about the issue it certainly bodes well, but only time will tell.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post FTC Chairwoman Goes After Pesky “Resort Fees” at Hotels appeared first on Law Street.

Things continue to get worse for the University of Phoenix. After the FTC began investigating the parent company of the for-profit string of schools–Apollo Education Group–more government agencies are either launching investigative probes or turning away from the company.

On Thursday the U.S. Department of Defense officially put the University of Phoenix on probation. Essentially that means that the for-profit schools will be barred from recruiting on military bases, and veterans won’t be able to use the money they receive from the department’s tuition assistant program for education at any of the University of Phoenix branches. However, any students that are currently using the DoD’s benefits and are enrolled in classes are allowed to continue their education.

The DoD didn’t necessarily disclose the exact reasons for its dismissal of the University of Phoenix. However, Military Times reported on a letter it obtained that was sent by the Office of the Assistant Secretary of the Defense to the University of Phoenix. Reasons it cited for putting the for-profit collection of schools on probation included the probes by the FTC and the state of California, as well as recruitment attempts that broke the DoD’s policies. One of those was the use of “challenge coins” According to the Wall Street Journal:

The coins—which are bigger than a silver dollar and often have unit insignia—are often given by those in the military to one another for a job well done or to commemorate an event. The University of Phoenix used trademarked seals and insignia on their coins without the consent of the military, according to the Defense Department. The university said it has since stopped using such coins.

However, the DoD isn’t the only government agency that’s not getting along with the University of Phoenix. On Friday, just a day after the DoD’s announcement, the Justice and Education Departments announced joint investigations into the University of Phoenix. They will be establishing an interagency task force to ensure that the company is held to proper accountability and oversight. These moves by the DoD, the Justice Department, and the Department of Education are consistent with the FTC probe, which is attempting to determine if the University of Phoenix used unfair or deceptive recruiting practices, particularly when it came to recruiting veterans.

In light of the DoD’s announcement, the University of Phoenix stock fell nine percent. The University of Phoenix is almost certainly on a downturn–this is just the latest bad news for the for-profit education giant.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post The University of Phoenix Continues to Fall appeared first on Law Street.

Energy drink company Vemma is in a lot of trouble after the Federal Trade Commission (FTC) recently announced that it was temporarily shutting down the company. The FTC has stated that Vemma was running an illegal pyramid scheme that targeted young adults and students.

#FTC shuts down #vemma nutritional drink’s alleged pyramid scheme http://t.co/iPrGiIbVtP pic.twitter.com/7qhrUpCwAg

— UPI.com (@UPI) August 28, 2015

Vemma recruited “affiliates,” most of them impressionable college students, who then were required to purchase starter kits to sell the nutrition drinks to others. Products that Vemma produced included Verve, and Bod-e. The starter kits were $500 each, and then Vemma affiliates had to purchase an additional $150 in products and marketing tools each month. Vemma told the affiliates that they could make up to $50,000 a week working for the company. Despite those claims, the vast majority of participants ended up losing money, or earning very little.

But most importantly, the affiliates also helped to recruit more affiliates who were then subject to the same outrageous fees. According to the FTC, Vemma made its money by bringing on affiliates–hence the pyramid scheme accusations. Vemma made over $200 million in revenue in 2014 through these methods. Jessica Rich, Director of the FTC’s Bureau of Consumer Protection stated:

Rather than focusing on selling products, Vemma uses false promises of high income potential to convince consumers to pay money to join their organization. We are also alleging that Vemma is an illegal pyramid scheme.

Vemma is also being accused of misleading marketing–the promotional materials it used to try to attract the affiliates promised that if you worked for the company you’d be “driving a BMW within 90 days” and featured pictures of young people in luxury vehicles, yachts, and jets.

Vemma isn’t the first nutrition drink company to come under a watchful eye. Herbalife was also accused of running a pyramid scheme in 2013, by a hedge fund called Pershing Square. Ironically, there’s a connecting between Herbalife and Vemma as Anthony Powell jumped ship from the former to the latter that same year. The FTC is now investigating Herbalife as well.

Vemma shows the mighty fall far, as it was once heralded as a company on the rise. The Phoenix Business Journal–Vemma is based out of Arizona–named it the Number one fastest growing private company on the Arizona Corporate Excellence. However, at this point it seems like that growth was begotten through illegal means.

For now, the FTC suit is still ongoing, but it doesn’t look like Vemma will be springing back anytime soon.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post FTC Accuses Vemma of Running a Pyramid Scheme appeared first on Law Street.

For a while, it seemed like for-profit colleges were the newest, hottest frontier in higher education. But with current student debt problems, and many revelations about some of the predatory practices of for-profit colleges, the trend appears to have officially passed. Arguably the most well-known for-profit institution of higher learning–The University of Phoenix–may be the latest to find itself in hot water.

Late last week the parent company of the University of Phoenix, Apollo Education Group, released information that the Federal Trade Commission (FTC) was investigating the company. The investigation is attempting to determine if the University of Phoenix ran deceptive or unfair business practices. The investigation is particularly focused on its recruitment of veterans. The accusations claim that the company has left veterans with high levels of debt after collecting hundreds of millions in GI Bill money. It’s not just the GI Bill money that the University of Phoenix has collected, however, according to financial records the company has collected over $488 million in fees and tuition from veterans’ own money for its online programs, and additional sums at various physical locations.

The University of Phoenix has been declining slowly for a little while now. Five years ago, the school reported almost half a million students. That number has been essentially halved since then. In 2012, the University of Phoenix was forced to close 115 of its campuses. In addition, revenue has been declining, and there have been many accusations levied against the company in regards to the way that it treats its students and potential recruits.

The controversy over the University of Phoenix is borne out of concerns that the school required participants to take out expensive loans, which could have been fine had those participants had the ability to pay back those loans after they graduated. However, the education provided at the University of Phoenix doesn’t necessarily lead to employment, the credits usually don’t transfer to other schools, and the degrees aren’t always recognized by employers.

In order to cooperate with the investigation, as Apollo Education Group promised in its statement, the company will have to provide the federal investigators with documents such as financial information, marketing, billing, debt collection, accreditation, and military recruitment practices.

This investigation into the University of Phoenix is consistent with a theme of increased scrutiny on for-profit schools, many of which are struggling in the now seemingly turbulent educational environment. Last month, the Obama Administration began cracking down on for-profit schools. A new rule that took effect in July from the Department of Education is the “gainful employment rule” which “requires colleges to track their graduates’ performance in the workforce and eventually will cut off funding for career training programs that fall short.”

Equal opportunities for education are essential, but not if they hurt students more than they help. There’s now significant suspicion that many for-profit institutions fall into the latter camp–University of Phoenix may just be the latest to get in trouble as a result.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post University of Phoenix Under FTC Investigation appeared first on Law Street.

Every few years, a scandal breaks where it is discovered that a charity isn’t donating as much as it claims of the funds that it raises. But a new story coming out of Tennessee puts pretty much any other misbehaving charity to shame. A civil complaint filed by the Federal Trade Commission (FTC) revealed that four related charities, all run by members of the same extended family, donated only three percent of the $187 million they raised from 2008-2012. The rest of the money went to items for the family.

The charities are called the Cancer Fund of America, the Breast Cancer Society, the Children’s Cancer Fund of America, and Cancer Support Services. The Cancer Fund of America and Cancer Support Services both appear to be run by the same man, James Reynolds Sr. His son, James Reynolds Jr., runs the Breast Cancer Society, and his ex-wife Rose Perkins heads up the Children’s Cancer Fund of America. In addition to the clear familial connections at the top of each charity, multiple other family members worked for the organizations and were rewarded handsomely.

There have been allegations levied against these charities for a while–CNN went after the Breast Cancer Society, Children’s Cancer Fund, and Cancer Fund of America in 2013, telling potential donors to stay away and calling them fraudulent. But these recent FTC findings will spark serious change. Two of the charities–the Breast Cancer Society and the Children’s Cancer Fund of America–appear to have agreed to disband, but legal action is still moving forward against the other two charities, as well as against James Reynolds Sr.

So, if the money wasn’t going to help cancer patients, where was it going? That’s the truly upsetting part, as it seems that it was going directly into the pockets of the Reynolds family. According to the FTC’s complaint:

[D]onated funds were used to pay for vehicles, personal consumer goods, college tuition, gym memberships, Jet Ski outings, dating website subscriptions, luxury cruises, and tickets to concerts and professional sporting events.

In even more upsetting revelations, the charities didn’t follow through on promises they made to cancer victims, such as volunteering to drive them to appointments, or sending ibuprofen instead of more helpful promised pain medications. So not only were the heads of these organizations taking money from the people who really needed it, they weren’t following through on promises to cancer patients. That’s about as low as you can get.

There are plenty of charities that do truly good work and try to spend as little money as possible. It’s also not too hard to find them, because free tools like “Charity Navigator” exist that evaluate how charities spend their money. It would be nice to assume that every organization that purports to be raising money for good is actually doing so, but it’s a truly sad reality that not every group is honest. The four “charities” run by the Reynolds family certainly proved that, and hopefully they’ll pay the price for their truly reprehensible dishonesty.

Anneliese Mahoney

Anneliese Mahoney is Managing Editor at Law Street and a Connecticut transplant to Washington D.C. She has a Bachelor’s degree in International Affairs from the George Washington University, and a passion for law, politics, and social issues. Contact Anneliese at amahoney@LawStreetMedia.com.

The post Your Donation to This Cancer “Charity” Funded Online Dating Subscriptions appeared first on Law Street.

On Wednesday the European Union’s antitrust chief hit Google with a double whammy. The EU formally accusing the multinational company of abusing its web dominance to the detriment of its competitors, as well as announcing it would begin officially investigating whether Google’s Android smartphone software forces phone makers to favor the company’s own services and applications.

In a press release issued by the EU, Google was accused of diverting web traffic in the European Economic Area from its rivals to favor its own products and services, particularly when it came to shopping websites. The statement warns that this kind of business practice hinders its competitors‘ “ability to compete, to the detriment of consumers, as well as stifling innovation.”

Anti-trust laws are meant as an economic safeguard to promote fair competition which benefits all consumers, while also preventing any one business from getting too big and becoming a monopoly. If the EU finds Google in violation of the anti-trust laws, the internet search giant will be forced to completely change the way it does business overseas and could also face a fine up to $6 billion.

According to the New York Times, the European Commision will also be launching an alternate investigation into Google’s “monopolistic” mobile business practices. The EU is trying to see if phone makers who want to use Google’s Android operating software–including Google owned applications like Youtube–are in fact contractually obligated to give those applications prominent features on their mobile devices.

Margrethe Vestager, the European Union competition commissioner, was quoted in the New York Times saying:

Smartphones, tablets and similar devices play an increasing role in many people’s daily lives, and I want to make sure the markets in this area can flourish without anticompetitive constraints imposed by any company.

Google responded to the investigation in a blog post Wednesday writing:

While Google may be the most-used search engine, people can now find and access information in numerous different ways — and allegations of harm, for consumers and competitors, have proved to be wide off the mark.

In 2013, the United States’ Federal Trade Commission investigated Google for similar complaints but closed its investigation, deciding not to take any action against the company even though the investigation found similar issues of search bias.

This time around the EU will have to prove that Google deliberately buries better search results, expanding beyond just e-commerce, in favor of its own company sourced content, although defining what qualifies as “better” could be tough. Subjectively speaking, Google’s actions may not actually be anti-competitive, but rather a better optimization for what consumers actually want.

Google now has 10 weeks to officially respond to the EU’s complaint, where they could settle the matter. If not, a lengthy court battle is an almost guarantee.

Alexis Evans

Alexis Evans is an Assistant Editor at Law Street and a Buckeye State native. She has a Bachelor’s Degree in Journalism and a minor in Business from Ohio University. Contact Alexis at aevans@LawStreetMedia.com.

The post EU Goes After Google with Anti-Trust Charges appeared first on Law Street.

You’re being tracked.

Surprise!

Well maybe that’s not a surprise since  Americans are pretty cynical on issues of spying. It may surprise people, however, that the things they enjoy, such as digital news articles, videos, wearable technologies, and wireless appliances are all tracking their behavior. Depending on the technology used, data detailing frequency of maintenance, a person’s interests or vital signs, and metadata like location and time is also collected. This information analyzes everything from potential consumer needs, to uncovering relationships and patterns that weren’t previously known. The benefits of big data are enormous but we must consider how else this information could be used? At what point could this become a privacy concern?  Also, what steps are being taken to prevent possible manipulation?

Click here to find out everything you need to know about the big business of Big Data.

The increased use of technology to record defense capabilities, healthcare needs, government practices, as well as maintenance and safety needs are all positive ways big data has affected society. One positive effect translates into saving lives of premature babies after sensors record an uptick in body temperature, which could be a sign of an impending infection. Watching the Centers of Medicare and Medicaid Services prevent and stop more than $100 million worth of fraud after implementing the Fraud Prevention System, is another example of the advantages of Big Data. These two incredible examples of how Big Data is used as a  positive resource don’t even begin to highlight the many significant contributions it makes to society.

From a business perspective, companies can use the information from data profiling to identify similar or related products, social issues, and events of interest to consumers. How products and events are marketed to consumers is directly related to an advertiser’s ability to collect data and complete a practice known as behavioral targeting. An example of online use that constantly collects data is the social media platform, Facebook.  Most people are unaware that on top of the information provided by their profile, something as simple as posting a picture on Facebook provides more data and other related metadata, such as time and location, to the platform. This information as outlined in the company’s Data Use Policy can be used as stated below.

Sometimes we get data from our affiliates or our advertising partners, customers and other .third parties that helps us (or them) deliver ads, understand online activity, and generally make Facebook better. For example, an advertiser may tell us information about you (like how you responded to an ad on Facebook or on another site) in order to measure the effectiveness of – and improve the quality of – ads.

I want to note the first line of the data use policy section provided above, which says, “sometimes we get data from our affiliates or our advertising partners.”  Now wait a second, how do their ad partners and affiliates have data that can be linked to specific people and why are they able to pass it on to others?  The data use policy explicitly tells us that those affiliates and partners have collected data through responses consumers have provided for other ads on other sites, which is then used to create a behaviorally targeted ad for Facebook and vice versa. In addition, cookies, web beacons, and IP addresses are all used to create an online profile able to frame our digital identities. At that point there’s no real need to have a name that identifies individuals. So when companies like Google, Facebook, Yahoo and others declare that the information they share is passed anonymously, they’re technically telling the truth.

But these capabilities, most of which are not visible or available to the average consumer, also create an asymmetry of power between those who hold the data and those who intentionally or inadvertently supply it. – May 2014 Big Data Report

The outlined intent as stated by the terms above is to improve the Facebook experience by making sure Facebook knows what is important to its users. By identifying what’s important to each individual, Facebook can ensure that users see more of the same information they’re most likely to be interested in on either their newsfeeds or in advertisements. This sounds great right? Modifications made to the information seen on the newsfeed and in advertisements are based on:

1. Interests
2. Location
3. How often you use Facebook
4. Books you like and/or have read
5. Movies you like and/or have seen
6. TV shows you like and/or watch
7. Gender
8. Online purchasing habits
9. Other information provided by Facebook affiliates/partners/third parties
10. Topics you post about
11. Your friends list
12. Clubs/social groups/schools you’re associated with

WAIT ONE MINUTE!

Oh my goodness, they know you in a way that has just gotten uncomfortably scary right?

Not only can your timeline be manipulated, but so can your perception of what is going on around you. Facebook received criticism after admitting that for one week, it intentionally tried to make 155,000 of its users sad for no other reason than just to see if they could do it.  Another example can be seen in how conversations concerning the social upheaval in Ferguson, Missouri was somehow missing from many Facebook newsfeeds while Ice Bucket Challenges were commonly seen. People wanted to know how life on this social media outlet could seem so out of the loop. That was until techies realized that a Facebook algorithm used to filter out posts Facebook feels users wouldn’t be interested in, figured its users were much more interested in Ice Bucket Challenges than discussions on social inequities, policing, race relations, civil liberties and so forth.

For all we know, Facebook may have gotten it right.  After being bombarded by 24-hour news cycles and other  social media outlets like Twitter, which were jammed with Ferguson discussions, it may have been nice for users to escape to a place where Ferguson wasn’t the only thing discussed.

Make no mistake, Facebook is not the only outlet that uses, collects, and has the ability to manipulate Big Data. Beyond Facebook is the general use of the internet and digital technology, all of which can collect big data. What must be done now, is to determine the proper use for this information and identify ways to protect the privacy of users. Several government agencies, departments, and branches of government are interested in discussing these topics. This can be noted by the FTC’s call to identify how data is categorized, used, and the applicable laws to protect consumers. Additionally, organizations like the Open Internet Institute, Common Cause, Free Press, and Public Knowledge have submitted comments to the National Telecommunications and Information Administration (NTIA) on the importance of protecting telecommunications metadata.

With more people, governments, and organizations identifying concerns, changes can be made and applicable laws can be clarified to protect consumers and avoid impositions of privacy.

Teerah Goodrum

Teerah Goodrum is a Graduate of Howard University with a Masters degree in Public Administration and Public Policy. Her time on Capitol Hill as a Science and Technology Legislative Assistant has given her insight into the tech community. In her spare time she enjoys visiting her favorite city, Seattle, and playing fantasy football. Contact Teerah at staff@LawStreetMedia.com.

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“You may not know them, but data brokers know you,” Federal Trade Commission (FTC) chairwoman Edith Ramirez said at the release of an FTC report about the data broker industry. Data brokers know where you live, what you buy, what medical conditions you have, your background, interests, and even the names of your kids. It sounds like something out of a sci-fi movie, so it is no wonder most Americans have no idea the thriving market for their personal information even exists. Here’s everything you need to know about how data brokers collect your information, what it is used for, and what protection you have.

What are data brokers?

Data brokers are companies that compile and resell or share the personal data of consumers. The FTC released a report on May 27, 2014 examining nine companies in the industry: Acxiom, CoreLogic, Datalogix, eBureau, ID Analytics, Intelius, PeekYou, Rapleaf and Recorded Future. These companies derive a whopping $426 million in annual revenue from their products.

The information set held by these companies is massive. Acxiom estimates it holds roughly 1,500 pieces of data per consumer. Another broker dwarfs Acxiom with 3,000 data points for nearly every U.S. consumer. One broker is said to maintain about 700 billion aggregated data elements and adds more than 3 billion pieces of data each month. Another database has information on 1.4 billion consumer transactions alone, such as credit card purchases. Watch an in-depth look at data brokers by 60 Minutes below.

Where do data brokers find their information?

Contentions with the data broker industry arise from the fact that information gleaned does not come directly from consumers. Data brokers garner a lot of information from publicly available sites. A site relaying U.S. Census data can provide information regarding local demographics and real estate value. These firms get additional information from voter records, tax records, court records, mortgages and property information, driving records, and numerous other avenues. Companies can scour social media sites, such as LinkedIn, for any publicly-available information. Data brokers also gain a lot of information from card loyalty programs, credit cards, and advertising agencies that may follow a user’s online activities. If you recently bought a subscription to Forbes Magazine or purchased a new dress from a catalog sent to your home, these data brokers will know. By compiling all this information, brokers begin to paint a profile of you, including your age, race, income, social security number, religion, political affiliation, criminal history, movie preferences, gun-ownership, gym membership, and hobbies.

What is this data used for?

Individual data points are compiled to form a profile of potential consumers who can then be targeted for specific products. The information allows companies to more accurately target consumers for advertising campaigns and gain information about consumer preferences. The FTC report shows that data brokers usually package data into two forms:

1. Data elements: Age, family, and interests.
2. Data segments: Compilation of interests used to to create a list of people with similar characteristics. Here are some examples of these list segments: “African-American Professional;” “Allergy Sufferer;” “Bible Lifestyle;” “Biker/Hell’s Angels;” “Plus-Size Apparel;” “Twitter User with 250+ friends.” Other categories include people with high cholesterol or those interested in novelty Elvis items.

Data brokers then use this information to create various products in three different categories:

1. Marketing: This includes mail, email, telemarketing, mobile, and TV campaigns. To target consumers, marketers use a process called “onboarding.” Onboarding allows marketers to load offline information, such as magazine subscriptions or store loyalty cards, into cookies that digital advertisers use to target consumers. Cookies are stored in a computer’s browser and allow advertisers to promote their products on numerous Internet services.
2. Risk Mitigation: This includes identity verification. These products use analytics to help banks comply with “know your customer” identity verification requirements under the USA Patriot Act. Products also include fraud detection to track patterns of attempted fraud. For instance, these products can track how long an email address has been used or whether a delivery address matches a listed consumer.
3. People Search: This includes products generally intended for use by individuals. Products can search for someone’s criminal record, ancestry, phone number, telephone history, or social media information. Most come in the form of fee-based search products.

Does the data make our lives easier?

Many people would agree that products that help to verify one’s identity are a good thing. Companies that can link consumer purchases to personal information like an address, phone number, and email drastically reduce chances of fraud. Some also see personalized advertising as a good thing. Say you are a senior citizen. Rather than scrolling through the Internet and seeing ads for baby strollers or discounted student loans, you might see ads for healthcare services. Targeted advertising means you receive information and discounts for things you actually use instead of products with no relevance to your life. Ideally the more information data brokers have about you, the more they can target your individual tastes. While each individual piece of data has little benefit, the aggregation of this data by data brokers is immensely beneficial to companies doing market research to improve and tailor their products.

How are data brokers changing political campaigns?

The use of personal data is not limited to what you buy. In the 2012 elections, campaigns contracted with political data brokers to match voting records with cookies on computers. Voter registration lists have long been used to target voters. Combined with more information, these lists now take a powerful form in the digital arena. Political microtargeting allows campaigns to utilize information from data brokers to deliver a specific message to a target demographic. Data can help campaigns decide which voters are most likely to respond to a specific ad or which groups need to be targeted with a specific message. Candidates can target registered Democrat or Republican voters with online ads and can even target based on how much the individual has donated to campaigns before.

President Obama’s 2012 re-election campaign was among the first to use big data to its advantage. The 2012 team assembled an analytics department five times the size of that in its 2008 campaign. Some insights into the use of data in Obama’s 2012 campaign:

• As TIME describes, the team discovered that East Coast women between 40 and 50 were not donating as much as hoped. This demographic was the most likely to hand over cash for the chance to dine with a gravitational celebrity. The campaign’s solution? A fundraising drive with the prize being a dinner with Sarah Jessica Parker.
• The campaign used data to predict how much money they would get from each fundraising email. They also used demographics to determine which groups would be most responsive to an email signed by either Barack Obama, Michelle Obama, or Joe Biden.
• The campaign bought data from brokers regarding the television-viewing habits of Ohioans. The campaign was able to combine lists of voters with lists of cable subscribers and then coordinate the information of watching habits. Using this information, they targeted campaign ads to specific demographics at the exact time these niche voters were watching TV. This led to the campaign buying airtime in shows like Sons of Anarchy and the Walking Dead rather than traditional news programming. Watch for more on the use of big data during Obama’s reelection campaign below.

Little information is disclosed on just how much data campaigns can access. Inevitably the collection and effective use of data will play a huge role in the 2016 presidential election, but not all consumers are happy with that. The regulation of the use of data for political purposes raises questions of free speech and privacy. Others claim microtargeting actually offers more privacy, since the data does not include names or physical mailing addresses. It may be hard, however, for consumers to opt out of political advertising. Even lists like the National Do Not Call registry have exceptions for political campaign calls. According to a study by the University of Pennsylvania, 86 percent of Americans said they did not want political advertising tailored to their interests.

What are the problems with data brokers?

There is a certain “creepiness” factor to data collection without consumer consent. Target tried to market products to new parents by identifying them even before the baby was born. Data showed that pregnant women purchased products like cocoa butter and calcium tablets. Target began sending targeted mail to these women. But instead of finding it helpful, the women found the fact that Target knew they were pregnant to be unnerving.

Others worry about the effects of outdated data. Consumers have little access to immediately change what information that brokers have on them, such as an address change or marriage. This means people could potentially be prevented from making a purchase solely based on outdated information. Outdated information becomes more offensive when the deceased remain on data broker lists and continue to receive offers in the mail. Some women revealed stories of experiencing a miscarriage yet continuing to receive insensitive mailings from Gerber and American Baby Magazine.

Companies that have such specific information about segments of consumers may take advantage from the data. An example from the FTC looks at the case of a consumer labeled to be a biker enthusiast. This person might get more coupons for motorcycles and gear, but they could also see higher insurance rates if companies use this information to conclude this individual engages in risky behavior. Watch a Congressional hearing on the industry’s issues below.

An Acxiom presentation to the Consumer Marketing Organization in 2013 indicates further issues with potential discrimination. Acxiom placed customers into “customer value segments.” Data showed that while the top 30 percent of customers add 500 percent of value, the bottom 20 percent actually cost 400 percent of value. The bottom 20 percent call customer service numerous times and cost the company in returns. The company would be better off ignoring these customers altogether, and data brokers can help companies to identify these costly customers. These high-cost customers could then face higher prices or poor service without even being aware they are discriminated against.

Do people have any protection?

The problem most people have with the collection of data is that they have no say in it. They are not aware when information is being collected, nor are they in control of what it is used for or if it is correct. The resale and illegal use of the data is prohibited. Data brokers also suppress protected lists such as phone numbers on the Do Not Call Registry.

Some data brokers do try to protect consumers. Some voluntarily remove information regarding children and teens from their data. Others provide ways to edit and review what data the broker has on you. Acxiom uses aboutthedata.com for this very purpose. Epsilon allows consumers to review information, but reviewing the information costs $5 and requests can only be made by postal mail. Trying to review information collected by every broker is extremely time consuming. Watch for more on how to protect yourself below.

No laws require brokers to maintain the privacy of consumer data unless it is used for prohibited purposes. Federal law protects the confidentiality of medical records. The Fair Credit Reporting Act (FCRA) restricts the search of information when determining eligibility for employment, credit, or housing; however, most data does not fall under the scope of FCRA.

What is the FTC pushing for?

The FTC report recognizes the immense value of data brokers to both companies and consumers; however, the FTC has offered the following recommendations to improve the industry and bolster consumer protection:

• Create a central database where consumers can see what information about them was collected. The database should also allow consumers to opt out from the data collection.
• Require brokers to list their data sources.
• Increase industry visibility and consumer awareness.
• Comprehensive legislation to prevent the discriminatory use of data. For instance, some categories infer sensitive statistics. “Metro Parents” are single parents primarily high school-educated handling the stresses of urban life on a small budget. “Timeless Traditions” are immigrants who speak some English but generally prefer Spanish.
• Adopt a series of best practices, including better protection for minors, improving data security, preventing unlawful discrimination, and restricting collection to only needed data.

The Direct Marketing Association (DMA) and other groups attacked the FTC report. In an interview with the Washington Post, Stuart Ingis of the DMA said, “You’d think if there was a real problem, they’d be able to talk about something other than potential” abuses.

The data broker lobby is very powerful. Senators John D. Rockefeller (D-WV) and Edward Markey (D-MA) led the regulatory push by proposing the DATA bill on February 12, 2014, requiring data brokers to be transparent about the information they collect. But considering the fact that political campaigns benefit from data broker information when targeting voters, it is unlikely there will be new legislation on data brokers in the near future. In the meantime, expect data brokers to know much more about you than you know about them.

Resources

Primary

FTC: Data Brokers: A Call for Transparency and Accountability

Ed Markey: Markey, Rockefeller Introduce Data Broker Bill

White House: Big Data: Seizing Opportunities, Preserving Values

Senate: A Review of the Data Broker Industry

Additional

Yahoo: FTC Wants More Transparency for Data Brokers

Data Privacy Minitor: FTC Report Seeks Congressional Review

Privacy and Security Law Blog: “Getting to Know You, Getting to Know All About You”

Washington Post: Brokers Use Billions of Data Points to Profile Americans

ProPublica: Everything We Know About What Data Brokers Know About You

Slate: What Do Data Brokers Know About Me?

CNN: Why Big Companies Buy, Sell Your Data

New York Books: How Your Data are Being Deeply Mined

Pulitzer Center: Consumer Data Privacy in Politics

Time: Inside the Secret World of the Data Crunchers Who Helped Obama Win

ProPublica: Everything We Know So Far About Obama’s Big Data Operation

AdWeek: Confessions of a Data Broker

Alexandra Stembaugh

Alexandra Stembaugh graduated from the University of Notre Dame studying Economics and English. She plans to go on to law school in the future. Her interests include economic policy, criminal justice, and political dramas. Contact Alexandra at staff@LawStreetMedia.com.

The post The Big Business of Big Data appeared first on Law Street.

The right to disappear has become increasingly en vogue. In Europe, the movement has particular strength as the European Union passed directives protecting it, and European courts have challenged large corporations to comply with the law.

The right to disappear basically attempts to preserve an individual’s control over information on the internet about himself. There are multiple variations, but it might, for example, allow a user to remove an unsavory article about herself on Google, or it may allow her to erase potentially damaging photographs from Facebook.

In the context of the internet, however, can information actually disappear? Does information on the internet resemble a sheet of paper that can disintegrate forever in a fire, or a tiny piece of silver incapable of actual destruction? In the U.S., a recent FTC complaint against Snapchat provides an interesting angle to explore this issue.

In a sense, the company leveraged the massive support for this right to be forgotten when it devised its own application. Social media usually insinuates some sort of public sharing, but SnapChat twisted the concept to include a more discreet form of connecting. SnapChat mushroomed into one of the most popular phone applications due to the transient nature of activity on the platform. While users still connect via the internet, the communications on SnapChat are intended to evaporate within ten seconds. SnapChat is the reverse of Twitter, Facebook, Instagram, Pinterest, and most other social media sites, in that SnapChat communications leave no cyber footprint. The app seemed to offer a way to use social media while still preserving one’s right to disappear.

Unfortunately, SnapChats don’t actually disappear as easily as the company claimed, according to a recent Federal Trade Communication complaint asserting that SnapChat did not properly inform its users that their SnapChats may be permanently saved and stored by other users.

The FTC complaint highlights that on the SnapChat’s FAQ, the company misstated that snapchats will permanently delete. The FAQ reads:

Q: Is there any way to view an image after the time has expired?
A: No, snaps disappear after the timer runs out

The FTC notes that users can easily screenshot the snapchat to permanently save it. Additionally, the complaint explains how to circumvent Snapchat’s policy of informing the sender if the recipient screenshot the snapchat: if a user on an iPhone quickly hits the device’s home button after taking a screenshot, the SnapChat application will close before informing the sender that the image has been saved. Thus, the FTC hammered down on SnapChat for its overly hyperbolic claim that users cannot save snapchats.

Importantly, this ruling highlights something crucial about the internet: it may prove impossible for information passed via the internet to ever truly disappear. Moreover, companies might face penalty if they claim to offer such a service.

What does this mean for the practicality of a right to disappear? Suppose, for example, that Google takes legitimate steps to remove information about a European citizen after he invokes his European right to disappear. The efficacy of Google’s actions depends on the objective nature of information on the Internet. Does information on the internet resemble a piece of silver or a piece of paper? One will incinerate in a fire, the other will not. What if Google does what it can to bury the information – the piece of silver — but it resurfaces? Can a user sue Google?

In the age of the internet, do we actually have a right to disappear? Or, should we more accurately label it a right to hide a bit better, because all we can legitimately do is frustrate efforts to find the information that will always exist somewhere?

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Imran Ahmed is a law student and writer living in New York City whose blog explores the legal implications of social media and the internet. Contact him via email here.

Featured image courtesy of [Search Influence via Flickr]

Imran Ahmed

Imran Ahmed is a writer living in New York. Contact Imran at staff@LawStreetMedia.com.

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Law Street writer Anneliese Mahoney brought us the  ‘Dark Side of Snapchat’ recently, explaining its less-than-savory methods of use by the consumers. Now it looks like all of those dark sides have landed the company, for lack better words, in deep shit. Snapchat is facing scrutiny of its practices and policies.

On May 8, 2014, Snapchat was slapped with complaints by the Federal Trade Commission that the popular mobile messaging app deceived consumers about the ephemeral nature of snaps, among other things. Furthermore, the FTC alleged that the company misrepresented the platform’s privacy and security. The FTC’s complaints allege the following:

1. Snapchat misrepresented its privacy and security actions in its marketing to consumers.
2.  Snapchat misrepresented the ephemeral nature of snaps when it is known to the company that there are several ways to store the ‘disappearing messages,’ such as third party software available for download.
3. Snapchat stored video snaps unencrypted on recipients’ devices outside of its ‘sandbox’ (in layman’s terms this means that they were stored externally from the app). Furthermore, the recipient could retrieve the ‘disappearing videos’ if he or she connected the mobile device to a computer.
4. Snapchat mislead consumers regarding the notification functionality. If a recipient of a snap took a screenshot, the sender would receive a notification, but the FTC noted multiple ways in which the notification system could be avoided.
5. Snapchat misrepresented its data collection practices to Android app users because the app transmits geolocation information, which is in direct contrast to the company’s privacy policies. (Clearly, marketing privacy does not mean actual privacy.)
6. Snapchat misrepresented the security of the ‘Find Friends’ feature. Snapchat received complaints that the feature did not verify the phone numbers, therefore, consumers potentially were communicating with someone other than the designated recipient.

While Snapchat settled the FTC charges and has not incurred monetary penalties, the company was placed on probation and will be subjected to independent privacy monitoring for the next 20 years. If the company is found misrepresenting its practices again, it could face up to $16,000 per infringement. However, this is relatively minor punishment for the company in my opinion.

Do I think that consumers truly believe that all their messages are private? No, not at all. However, if your business platform is based on some degree of privacy and security, you should really make an effort to deliver on those promises — not have one security breach after another. The company was rated with one out of six stars on the ‘Who Has Your Back’  2014 report released by Electronic Frontier Foundation last week. Snapchat is truly innovative and I hope it moves faster on the learning curve because it is a great app. But, in the words of Dottie People, “get your house in order.”

Click here to read the original post by Anneliese Mahoney: “The Dark Side of Snapchat.”

—

Ashley Powell (@danceAPdance)

Featured image courtesy of [Jose A. Perez via Flickr]

Ashley Powell

Ashley Powell is a founding member of Law Street Media, and its original Lead Editor. She is a graduate of The George Washington University. Contact Ashley at staff@LawStreetMedia.com.

The post The Dark Side of Snapchat Lands the Company in Hot Water appeared first on Law Street.

Attention companies using Pinterest as part of your marketing strategy: proceed with extreme caution. The popular social network, or “copyright infringement machine” as one commentator calls it, has turned into a platform where companies must tread carefully or face legal consequences.

Recently, Cole Haan, a fashion label specializing in footwear, ran a seemingly innocuous contest on Pinterest that ended up catching the attention of the Federal Trade Commission (FTC). The brand created the “Wandering Sole” campaign and sought to use Pinterest to market it. Thus, Cole Haan asked Pinterest users to create boards with their favorite Cole Haan images from the company’s own “Wandering Sole” board, and for the users to pin their favorite places to wander. Users who participated received the chance to win a $1000 cash reward.

win a $1,000 shopping spree from @colehaan ! share where your sole's are going to wander – http://t.co/m4cK5RCcDM

— Jennifer Chong (@jchongstudio) May 26, 2013

This contest — a popular type in the social media marketing world — may not seem detrimental; however, federal law provides that a company must make clear that it has a financial relationship with the individuals endorsing it. It seems that Cole Haan accidentally used Pinterest as a vehicle for illicit advertising. A user coming across the images pinned as part of the contest had no way of knowing that the images were in the running for a prize of $1000. In order to legally run the campaign, Cole Haan would’ve had to disclose the financial incentive.

Specifically, the FTC made four conclusions regarding the Wandering Sole campaign:

1. Pinterest users’ pins featuring Cole Haan images were endorsements. (‘Endorsement’ is a legal term of art, and the FTC has its own guidelines regarding the use of endorsements).
2. Individuals using Pinterest who saw the pins and boards relating to Cole Haan’s campaign had no reasonable way of knowing that the pins were motivated by a chance to win $1,000.
3. Cole Haan did not take appropriate steps to make it clear to average Pinterest users that the pins were part of a campaign with a $1,000 cash reward.
4. Cole Haan did not instruct participants in the campaign to disclose that their activity stemmed from Cole Haan’s campaign, not their own unsolicited Pinterest activity.

Importantly, the FTC decided not to persue enforcement action despite suggesting that Cole Haan violated federal policy. Basically, the FTC wrote a letter reprimanding Cole Haan, but did not financially punish the company or pursue any legal action. This likely results from the novelty of these issues. Companies using social media sites often accidentally violate federal laws since the platforms create new user experiences that do not perfectly cohere to the world the laws originally intended to govern. This is something we are bound to see a whole lot more of until the laws catch up with technological innovation.

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Imran Ahmed is a law student and writer living in New York City whose blog explores the legal implications of social media and the internet. Contact him via email here.

Featured image courtesy of [afunkydamsel via Flickr]

Imran Ahmed

Imran Ahmed is a writer living in New York. Contact Imran at staff@LawStreetMedia.com.

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