Ad Law Access : Washington D.C. Advertising Lawyer & Attorney : Kelley Drye & Warren Law Firm : New York, Chicago, Connecticut, New Jersey, Brussels

On May 9, 2013, the Federal Communications Commission ruled that sellers may be held vicariously liable under the Telephone Consumer Protection Act (“TCPA”) for unlawful telemarketing by third parties under certain circumstances. The FCC’s Declaratory Ruling addresses third-party liability for violations of the Do Not Call and prerecorded message restrictions of the Communications Act. The Commission ruled that, under both provisions, a seller may be held vicariously liable for violative calls placed by third-party marketing agents under principles of the federal common law of agency.

The Declaratory Ruling thus resolves a central question that is raised in a number of TCPA lawsuits: sellers may only be held liable for actions of those third party telemarketers that are determined to be agents, applying the federal common law of agency. Moreover, a manufacturer that simply puts a product in the chain of commerce that is later resold by a seller is not likely to be affected by this Ruling, provided that it does not otherwise trigger the TCPA’s seller definition.

With respect to how and under what circumstances the federal common law of agency will be applied to find a seller vicariously liable for the acts of third parties, the future is unclear – particularly with respect to claims based on alleged apparent authority and whether the FCC’s “illustrative examples” of such apparent authority set forth in the Ruling will influence courts in interpreting how the federal common law of agency should apply to the specific facts of a particular case.

For more on this decision, please reference the Kelley Drye client advisory.

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Mobile marketing, sweepstakes and services, including location-based services, are governed by an alphabet soup of statutes and regulations: TCPA, COPPA, CAN-SPAM, CPNI, etc. To complicate compliance even further, numerous class action lawsuits in state and federal courts have addressed issues and nuances that the Federal Communications Commission, Federal Trade Commission, and state regulatory agencies or legislatures have not.

On November 16th, Kelley Drye held a webinar which discussed the new rules of the road for mobile communications, marketing, and sweepstakes, and offered suggestions for reaching consumers while mitigating the legal risks.

Click here to download the slides from the webinar and click here to watch the recording.

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Data breaches caused by hackers or other forces outside the control of a business are a scary, and expensive, proposition for any organization that collects or retains personally identifiable information, or warehouses credit or financial information. According to a recent study by Symantec, an average data breach will cost an organization $5.5 million, including direct costs such as engaging forensic experts, outsourcing hotline support and providing free credit monitoring subscriptions, discounts for future products and services, and indirect costs such as in-house investigations and communication. These costs are in addition to the costs of potential litigation (often in the form of a class action) by customers alleging that the company failed to take adequate measures to protect their data, and investigations by government agencies, such as the Federal Trade Commission, that frequently become involved when breaches affect a large number of consumers.

Like any potentially catastrophic problem, insurance can be at least a partial solution. A new article in The Corporate Counselor examines insurance coverage for data breaches. In-house counsel may be surprised to learn that coverage for data breaches is not limited to specialty policies, and can often be found under standard CGL or property insurance policies. Any time a potential data breach occurs, it is essential for an insured to consider all forms of insurance that it carries and to provide prompt notice to its insurer(s) of any policy that even potentially could apply.

The article, "Insurance Coverage for Data Breach Claims," was written by Richard D. Milone, Edward E. Weiman, and Cameron R. Argetsinger.

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Last year, a CBS radio station in North Carolina ran a “Carolina Cuties” contest in which listeners were invited to submit pictures of their babies on the station’s website. The grand prize winner was be determined by public votes. Although broadcast announcements for the contest stated that voting would end on September 5, 2011, the station’s website and e-mails to the finalists stated that voting would end by September 4, 2011. One of the contestants complained to the FCC about the discrepancies.

The FCC requires broadcast licensees to disclose the material terms of their promotions -- including when and how winners will be selected -- and to conduct their promotions substantially as advertised. The agency wasn’t persuaded by the station’s argument that the discrepancies were due to inadvertent errors, holding that inadequate oversight of staff does not excuse a failure to run the promotion as advertised. The agency also rejected the station’s argument that the errors did not put any consumers at a disadvantage. Instead, the FCC noted that there was a potential for harm, and that a showing of actual harm is not necessary in determining whether a violation occurred. Accordingly, the FCC proposed a fine of $10,000.

This case demonstrates that companies can be held responsible for discrepancies between how they advertise a promotion and how the promotion is actually run. If you are running a promotion, make sure that your rules and marketing materials are in sync with how you actually run the promotion.  

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The FCC has issued a notice seeking public comment on a petition filed in February by SoundBite Communications seeking a declaratory ruling on text messaging. SoundBite asked FCC to issue a ruling that sending a one-time text message to confirm a consumer’s request that no further messages be sent does not violate the Telephone Consumer Protection Act (“TCPA”) or the FCC’s implementing regulations.

Under the TCPA, a person is prohibited from making non-emergency calls, including sending text messages, with an automatic telephone dialing system or an artificial or pre-recorded voice to a cell phone without prior consent. Industry best practice includes confirming receipt of an opt-out request via text message. However, several companies, including SoundBite, are the subject of class action lawsuits for sending the confirmations. SoundBite has asked FCC to expedite a declaratory ruling on the matter on the grounds that the confirmation messages are sent within the grace period established by FCC and that SoundBite does not use an automatic dialing system, as that term is defined in the TCPA. All companies that follow the same practice of sending confirmation of an opt-out request via text message should review the FCC notice and decide whether to comment on the petition. Comments are due to FCC by May 15, 2012.
 

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Changes to privacy regulations, such as proposed revisions to the Children's Online Privacy Protection Act (COPPA), and continuously evolving technologies, including mobile apps with location-based services, can make it difficult for businesses to ensure their privacy practices are up to par.

On February 16, Kelley Drye will gather government leaders from the FTC and FCC, and thought leaders in the industry, for a discussion about new regulations, enforcement trends, and best practices to avoid consumer privacy risks. Please join us for "Privacy in 2012: What to Watch Regarding COPPA, Mobile Apps, and Evolving Law Enforcement and Public Policy Trends."

Email dcevents@kelleydrye.com to register for the live seminar or teleconference.

KEYNOTE SPEAKER

Peter Swire, Professor of Law, Ohio State University; former Clinton Administration Chief Counselor for Privacy, U.S. Office of Management and Budget

PANEL 1:  COPING WITH COPPA: CHILDREN'S PRIVACY AND PROPOSED REVISIONS TO THE COPPA RULE

Ellen Blackler, Vice President - Global Public Policy, The Walt Disney Company

Mamie Kresses, Senior Attorney, Division of Advertising Practices, Federal Trade Commission

Saira Nayak, Director of Policy, TRUSTe

Moderated by partners Dana Rosenfeld and Alysa Hutnik of Kelley Drye & Warren LLP

PANEL 2:  MOBILE APPS: A PRIVACY AND CONSUMER PROTECTION HOT SPOT

Michael Altschul, Senior Vice President and General Counsel, CTIA

Jessica Rich, Associate Director, Division of Financial Practices, Federal Trade Commission

Jennifer Tatel, Associate General Counsel, Federal Communications Commission (invited)

Moderated by partners John Heitmann and Gonzalo Mon of Kelley Drye & Warren LLP

When:
February 16, 2012,  2:30 PM - 5:30 PM EST

Location:
Kelley Drye & Warren LLP
3050 K Street, NW, Suite 400
Washington, DC 20007-5108

And via audio webcast

RSVP:
Email dcevents@kelleydrye.com or contact Cassidy Russell at 202.342.8400.

This seminar is free of charge, but space is limited. Reserve your place today.

CLE and CPE credit may be available in certain jurisdictions.

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The rise of smartphones, wifi hotspots, and high-speed data networks has spurred new technology-based business models and the exponential growth of consumer information online. Chief among new technologies, the use of mobile applications—“apps”—has exploded in the past few years. From near-constant posts on Facebook to attacking the green pigs on Angry Birds, consumers have opened their hearts and wallets to mobile apps. While the upside is great, companies and developers considering a mobile app should also be mindful of the legal and business pitfalls of mobile apps and implement a process to sidestep common challenges.

A new article from E-Commerce Law & Policy, “Avoiding Trouble When Adding an App to the Business Model,” outlines several of these potential pitfalls and the best practices to avoid them.

For more information about this uncharted legal territory and emerging "rules for the road" for developing and marketing mobile apps, click here to view and listen to a recording of the Kelley Drye webinar, “Mobile Applications: Privacy and Data Security Considerations.”

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On July 14, 2011, a joint House Energy and Commerce Subcommittee hearing focused on online privacy policy and perspectives of the ‘big three’ federal agencies with potential jurisdiction over online privacy – the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), and the National Telecommunications and Information Administration (NTIA). The hearing, Internet Privacy: The Views of the FTC, the FCC, and NTIA, offered a comprehensive review of the state of online consumer privacy and the appropriate industry and government response to developments in online behavioral advertising and tracking. The hearing comes on the heels of a flurry of online privacy and data security legislation introduced in recent weeks and months. Witnesses included FCC Chairman Julius Genachowski, FTC Commissioner Edith Ramirez and NTIA Administrator Lawrence E. Strickling.

The hearing touched on issues including the economic impact of privacy regulation, defining the harms caused by data collection, agency jurisdiction and authority, protecting children, data security, and social networking. Click here for more detail regarding the major themes discussed at the hearing, which expanded the growing legislative record on online privacy and security.

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Do you know what kind of data your smartphone apps are collecting?

Understanding the flow of data, how it is shared, and whether your apps collect sensitive information such as mobile payments or location-based data is critical to avoiding regulatory scrutiny and litigation risks.

Join Kelley Drye on May 16 from 12 noon – 1:00pm EST for a webinar exploring this uncharted legal territory, “Mobile Applications: Privacy and Data Security Considerations.” Topics of discussion will include:

• The mobile ecosystem, including data flows and parties involved.
• Privacy and security considerations, including unintended data uses.
• Current issues in the legal landscape, including media coverage; inquiries and actions from Congress, the FTC, and FCC; litigation risks; and industry activity.
• Emerging “rules for the road” for developing and marketing mobile apps.

This webinar will address the privacy and information security questions that are top of mind for anyone involved in developing, marketing, selling, or serving mobile apps.

Kelley Drye Speakers:

Dana B. Rosenfeld
Chair, Privacy & Information Security Practice and Partner, Advertising & Marketing Practice

Alysa Z. Hutnik
Partner, Privacy & Information Security and Advertising & Marketing Practices

John J. Heitmann
Partner, Telecommunications and Privacy & Information Security Practices

Email dcevents@kelleydrye.com to register.

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