Tag Archives: Website Policies

FTC: Be More Precise In Your EULAs and Privacy Policies

FTC updateIf you’re running a “just legal” data collection operation, or if some portion of your revenue stream involves selling customer data, stop what you’re doing and pay attention for the next five minutes — it could have you a lot of hassle in the near future.

The Federal Trade Commission has made it clear that it’s tightening the reigns when it comes to the wording of end user license agreements (EULAs) and privacy policies.

How Typical Data Collection and Sale Businesses Work

Goldenshores Technologies maintained a lucrative (if not standard) Internet business operation:

  1. It offered a free Android app called, “Brightest Flashlight Free;”
  2. It collected information about everybody who downloaded the program, and then
  3. Goldenshores sold the data to 3rd party marketers.

The people loved the app and downloaded it millions of times over. (Not surprising when you consider that LED phone flashlights are the new “concert candle”.) To consumers, “Brightest Flashlight Free” served both a utilitarian – and perhaps aesthetic – purpose. But many users didn’t realize that every time they used it, the app gathered geolocation data, in conjunction with a device identifier, and bundled the data for third party ad networks. Cha-ching.

But the FTC felt Goldenshores was less than honest about how, when and why the information was collected.

So, consumer agency announced a consent order regarding the “Brightest Flashlight Free” application. What made the announcement noteworthy is that it didn’t focus on what Goldenshore’s policy said, but rather what it didn’t say.

The FTC’s main issues with the app:

  1. The company’s failure to inform customers clearly that the app collected and distributed precise geolocation info coupled with the phone’s identifier. The combination allowed third party marketers to match individuals with devices.
  2. The application presented users a no-share option, but before that choice was presented, the information had already been collected, rendering the opt-out useless.
  3. The Brightest Flashlight Free privacy policy was vague. Even though it did list a few ways in which Goldenshores may use data, it didn’t disclose that said information would be sent to third party advertisers.

Jessica Rich, Director of the FTC’s Bureau of Consumer Protection, explained the commission’s stance succinctly by stating, “But this flashlight app left them in the dark about how their information was going to be used.”

In an unusual step for the agency – and perhaps a harbinger of what to expect from the FTC under Edith Ramirez’s stewardship – the commission didn’t just delineate offer murky platitudes. Instead, the FTC outlined exactly what Goldenshore had to do to become compliant, thereby making clear the exact standard for geolocation app privacy disclosures.

So what verbiage does the FTC require for geolocation app privacy policies? Basically, the FTC now requires a clear-worded disclosure, appearing before the transfer of any information, which explains to consumers:

  1. How data is collected;
  2. How data is used;
  3. How data is stored;
  4. Who sees the data;
  5. Who data is shared with or sold to (if any); and
  6. Why data is collected.

App Developer Lawyer

Are you a developer in need of an attorney? Kelly Warner represents all kinds of tech startups and established online businesses. We’re not an old-school firm — and we don’t boast of Internet law expertise just because we know how to use Facebook. We’re a firm made up of affiliate marketers, gamers and even programmers — who also happen to be top-rated attorneys.

Get in touch today. Kelly Warner is ready to help smooth things for your digital or Internet-based business.

New LLC Operating Agreement Rules Coming Soon To California

California's new LLC operating agreement rules
California’s new LLC Rules Go Into Effect on January 1, 2014

On January 1, 2014 California’s Revised Uniform Limited Liability Company Act goes into effect. An update of the 1994 LLC law, the new statute will impact Golden State Limited Liability Companies with either a vague or nonexistent operating agreement.

The primary difference between the old and new laws is the number of “default rules”. Default rules are a set of obligations and provisions that kick in if an issue of dispute is not addressed in an operating agreement or if the parties don’t have an operating agreement. The new LLC law has more default rules than the old statute.

Here’s what you need to know:

California LLC Law Rule Change #1: Managers and Members Have More Leeway To Take Action

Under the new rules, individuals in a member- or manager-run LLC cannot take any action “outside the ordinary course of business” without obtaining unanimous consent of all members. As such, if your business’s current operating agreement specifies instances when members and managers can act, vote or protest a decision, then the new law won’t have an effect on your operation.

On the other hand, if your business’s old operating agreement does delineate or disclaim additional voting rights, nor include language that specifies voting rights as “described in the LLC Law,” then the January 1, 2014 changes will have an effect on your company. Why? Because any member could, in theory, have a valid cause of action if he or she finds out a decision was made without his or her approval. So if you do want everyone with a stake in your LLC having equal voting rights, and your current operating agreement does not address the issue, run, do walk, to get your agreement updated to specify limitations on a manager’s or member’s authority.

California LLC Law Rule Change #2: Assignees are now Transferees

Under the old law, any non-member to whom a membership interest was transferred was called an “assignee;” now they’re called “transferees.” Under the old law, assignees didn’t enjoy member rights. Under the new law: “An amendment to the operating agreement made after a person becomes a transferee is effective with regard to any obligation or LLC or its members to the transferee.” In other words, managers and member can theoretically vote to lower transferees’ piece of the pie on the day the transferee takes possession of the membership interest, which could lead to some nasty battles. If you want to avoid the hassle, update your operating agreement to address this new default LLC rule in California.

Membership Interests: Membership interests are considered personal property and therefore can be freely transferred by the holder to either members or non-members. Typically holders of membership interests have no governing or voting rights, just an economic interest.

California LLC Law Rule Change #3: Change in Dissociation Guidelines

Dissociation of a member to transferee status is a new provision of the 2014 California LLC law. Since the previous law didn’t provide for dissociation, businesses will probably want to add language to their operating agreements addressing the issue. Beginning on January 1, 2014, events that can trigger a dissociation include:

  1. Death of a member;
  2. Assignment of a conservatorship or appointed a guardian;
  3. A court order saying a member is incapable of carrying out duties;
  4. Member becomes a bankruptcy debtor and the LLC is member managed.

So, if you don’t want members to lose rights in the event of any of the above, make sure you change your current operating agreement to reflect the changes.

Moreover, a contradiction exists in the new California LLC law. On one hand, it states that dissociated members don’t have the right to access any records except for accounting records from the LLCs dissolution. However, another part of the law grants “a holder of transferable interest” the right to access certain LLC records and information. Again, make ensure your operating agreement covers this scenario or the new default rules take effect.

California LLC Law Rule Change #4: Personal Representatives Have Fewer Rights

Under the 1994 LLC law, members’ personal representatives had the right to exercise full member rights. Under the new law, however, the representative of a deceased or legally incompetent member only has the rights of a transferee.

California LLC Law Rule Change #5: Indemnification Added

The old law did not require the indemnification of any individual doing work on behalf of the LLC, so pre-2014 operating agreements may not even mention it. The new rules state that the LLC must indemnify members and managers of managed LLCs respectively, so long as he or she has fulfilled his or her “statutory duties.”

If you need an attorney to review your LLC operating agreement, contact Kelly Warner Law.

Legal Advice For Tech Startups: A Quick Guide

startup lawyer
Getting ready to launch a startup? Before you click the mouse, make sure all your legal ducks are in a row.

You’re starting a startup and need to know the applicable laws. Well, you’re in luck, because this is a quick legal guide to launching a tech startup. While it’s always a good idea to speak with a startup law attorney before launching, this advice for tech startups should set you down the right legal path.

First Things First: Pick A Home-base For Your Business

Not all state startup laws are created equal. Some states have affiliate-friendly statutes; others favor e-commerce outfits. Finding the best jurisdiction for your company is the first step in establishing a legal base for your operation. In addition to industry considerations, remember to review the partnership laws in your state of choice. Some states have laws that prevent a co-founder from being let go without being bought out, others don’t. Some have tax structures that favor small tech startups, some don’t. So when you’re debating the decision, take some time to really think about your business; think worst case scenarios and then figure out which state is best for you. If you’re not sure where to begin with something like that, a good startup lawyer can help.

Legal Advice for Tech Startups Point #1: Register That Intellectual Property Properly

These days, intellectual property is as valuable to a startup as a bottomless venture fund would be. OK, that’s an exaggeration, but it can’t be stressed enough that IP is the equivalent to digital gold. Think about how much it would sting if you lost your branding edge due to an ill-filed copyright or trademark registration.

Another bit of startup advice: in the interest of clean records, make sure the intellectual property is registered to the company, not an individual. In the event of a partner split, the last thing you need is to be haggling over who owns the IP. It could get nasty.

Legal Advice for Tech Startups Point #2: Work Out a Partnership Agreement and a Pre-Nup

If you are embarking down startup path with others, make sure a partnership “pre-nup” is signed. Starting a company can be stressful, just as stressful as an unsuccessful marriage. Putting an exit agreement on paper while things are good is a great idea. Moreover, it allows you to see how you and your partners deal with unpleasant necessities – and it may just save you from getting into the wrong relationship with the right people.

Legal Advice for Tech Startups Point #3: Domestic and International Online Privacy Laws

While the Internet industry currently has fewer regulations than many others, there are still a number to which all companies must adhere. If you’re planning on doing business overseas – or targeting clients in the EU as well as North America – then there are even more laws you must heed. Here’s a quick list of a few:

Children’s Online Privacy Protection Act

The Children’s Online Privacy Protection Act is the only Internet privacy bill that has not been shot down in some way by the Supreme Court of the United States. And it looks like it’s about to be updated again – in a not so great way. If you are running a site or app that could potentially be attractive to kids – even if it’s not your intent to target kids – you’d better familiarize yourself with COPPA regulations. If not, crippling fines could play a major role in your not so distant future.

Gramm-Leach Bliley Financial Modernization Act

The mighty GLB – otherwise known as the Gramm-Leach Bliley Financial Modernization Act – is a wide sweeping bill that affected many industries. Tech startups need to be aware of the bill’s very specific financial online privacy standards. It’s a nuanced piece of legislation that must be understood, or, again, you could find yourself beat before you warm up.

United Kingdom Cookie Law

The Internet knows very few borders. That’s why any startup in North America must consider Internet law happenings across the pond. Currently, the new UK cookie law is the main regulation any new online venture should understand and incorporate into their platform. If not, you could face some very time-consuming European litigation, and possibly a hefty fine.

Legal Advice for Tech Startups Point #4: The Dot Com Disclosures

If you market on the Web, you must follow guidelines in the Dot Com Disclosure — the online marketing bible put out by the Federal Trade Commission. It covers everything from the proper use of testimonials to disclosure statements to allowable online marketing language. Get a copy, read it, know it — doing so will save you a lot of grief in the long run.

Legal Advice for Tech Startups Point #5: CYB and Invest In Proper Website Policies

Every type of startup business – whether it be a groupon-type platform, a crowdsourcing project, an app or a social network – has its own set of provisions that need to be touched upon in a site’s terms of service, privacy policy and disclaimer. While some template website policies are perfectly fine for your average run of the mill website, a legitimate startup could find themselves in some very deep legal hot water by using one. Besides, there are inexpensive legal services out there that custom draft terms, so you won’t have to pay a huge amount for the protection.

The Kelly / Warner Law Firm was established to cater to the needs of online businesses and Internet entrepreneurs. We know the industry and the regulations that govern it; we understand the difference between blackhat and whitehat; we spend our days lawyering and our evening devouring anything tech-related. If you’re a startup looking for legal counsel, contact us today. We’re confident you’ll be impressed with our efficiency…and Internet law geek quotient.

Affiliate Marketing Legal Alert: Senator Unveils New Digital Marketing Bill

Internet Marketing Law
Sen. Schumer is proposing a new law that could affect affiliate marketers.

All affiliate marketers should take a moment to read Senator Chuck Schumer’s new Internet law proposal that seeks to raise fines on any entity that places calls to any number on the National Do Not Call Registry.

An aggressive piece of affiliate marketing law legislation, the bill seeks to raise fines and re-classify violations as felonies.

“Congress has enacted the laws to fight back against [robo advertising], but the companies are using new tricks, and now we must enact stiffer penalties to make sure the laws have teeth so the regulators can bring the rogue firms to heel,” Schumer explained to CBS news.

How The Proposed Act Could Affect Affiliate Marketers

Specifically, if the new bill is passed, anybody who places illegal robo-calls or digital messages will be fined $20,000 per call. Moreover, it would redefine DNCR violations as a felony, as opposed to a misdemeanor. And perhaps most alarmingly, Schumer’s proposal includes provisions for up to 10 years in jail for egregious violations. (The jails are already overcrowded. Is it really the smartest move to start throwing non-violent offenders into prison over something as non-threatening as unsolicited marketing?)

When being interviewed about his new bill proposal, Sen. Schumer opined that the punitive damages do little in the way of mitigating violations. Since the current codified DNCR fines are so low, he reasoned that businesses risk getting caught and rationalize the cost by figuring that the profit earned from breaking the law would outweigh any violation fines that could be levied.

Are Text Messages Subject To Do Not Call Rules?

Since the National Do Not Call Registry first popped onto the scene, there has been some confusion as to whether or not messages and texts to mobile devices were actionable under DNCR regulations. While there are a few exceptions, these days, the general rule of thumb is that any communication to any number – whether to a cell phone or land-line – is subject to do no call legislation.

Other Affiliate Marketing Laws & Regulations

In addition to Do Not Call legislation, every affiliate marketer, in order to stay on the right side of the law, should also familiarize themselves with the Dot Com Disclosures and FTC case law. Internet marketers who market children’s products must pay heed to the Children’s Online Privacy Protection Act; those who deal in finance services should familiarize themselves with the privacy provisions outlined in the Gramm Leech Bliley Act. And lastly, every affiliate marketer should make sure that they have the proper terms, privacy policies and disclaimers on their websites.

Get In Touch With An Affiliate Marketing Lawyer

The Kelly / Warner Law Firm was established to serve the needs of affiliate marketers and people who do business on the Web. Unlike other law firms, we know the digital world intimately. Not only are we AV-rated attorneys, but we’re also affiliate marketers. In fact, we’re such geeks that we even created our own legal app. If you work on the Web and are in need of an attorney who can address your legal needs quickly, efficiently and at the right price, give us a shout.

Click here to read more about Aaron Kelly – Internet lawyer and enthusiast.

Is A Federal Online Gambling Law On The Way?

Will 2013 be the year that online poker becomes legal across the U.S.?

Gambling is — and always has been — an oft-discussed legal issue in the United States. When the Internet came along, questions surrounding the online gambling arose. And now, with states starting to pass their own online gambling statutes, things may become even more complicated. For example, Arizona’s gambling laws are such that residents are often prohibited in taking part in nation-wide, online fantasy sports leagues, but Delaware just passed a law that essentially makes online gambling legal. In an effort to standardize legislation, we could see a federal online gambling law in the near future.

Senators Harry Reid of Nevada and Senator John Kyl of Arizona have been drafting an online gambling bill, and according to various industry publications, the two have finally agreed on terms. Word on the street is that Kyl sees this bill as important to his “legacy” – and as such agreed to a poker compromise.

So the question now remains: when will we get to see a draft version of this bill? Unfortunately, it probably won’t be for awhile. With the election around the corner, neither party wants to wake a sleeping dragon. As such, don’t expect to see anything having to do with online gambling on a national level until 2013.

The contents of the draft have yet to be released, but that hasn’t stopped pundits from pontificating as to whether or not a national online gambling act – developed by Reid and Kyl – would actually pass. Common sentiment is that the bill will easily pass in the House, but will dead-lock in the Senate. Why? As Texas representative Joe Barton explained, “neither party is going to put this up if it’s going to be a dogfight. It will only be put up if people are willing to vote for it.”

The common assumption is that the Reid-Kyl bill will contain exemptions for poker, similar to the provisions for online fantasy sports in the Unlawful Internet Gambling Enforcement Act of 2006.

News of a potential federal online gambling law comes in the wake of Delaware legalizing online gambling. Since the draft has not been made public, it is too soon to tell whether or not the Reid-Kyl bill will in any way affect Delaware’s new statute.

New Generic Top Level Domains On The Way For $25,000 A Pop

New generic top level domains on sale for $25,000
New generic top level domains are on the way. Expect an increase in domain dispute and procurement litigation.

Just when you acclimated to .com, .net, .org and .edu, a slew of new generic top level domains (gTLD) are on their way. And judging by the suffix request proposals revealed at a recent Internet Corporation for Assigned Names and Numbers (ICANN) London workshop, the new additions could alter the way we surf the Web.

More Descriptive gTLDs On The Way

According to reports, domain name endings could become more descriptive. For example, instead of going to StephenKing.com, in a few years, you may navigate to StephenKing.author. The change is expected to further compartmentalize the Internet – a fact that is bound to bring up various censorship, privacy and civil rights issues.

A process years in the making, ICANN has worked through technical glitches associated with the process and are now accepting applications from larger Internet companies bidding to control suggested gTLD additions. To illustrate, Google is looking to take over “.lol,” “.google” and “.YouTube,” while Artemis, a data security firm, is looking to lock-down “.secure.” Nearly 2,000 proposals were submitted including .doctor, .research, .music and .bank.

Generic top-level domains for various hobby groups, nationalities and sports are also expected to be incorporated into the domain naming conventions.

When Are These Generic Top-Level Domain Changes Going To Happen?

Don’t expect a different Internet overnight. Judging from past ICANN projects and the sheer enormity of this one, the roll-out won’t occur on a public scale for another two to three years…and that is if all goes according to plan.

Officials still must deliberate over trademark issues, international hate-speech considerations, not to mention the logistics of administering additional gTLDs. Besides, law enforcement entities need time to consider and implement new procedures as it relates to national security.

That all said, expect domain dispute and procurement litigation to heat up over the next several months, as competing bidders fight to gain control of highly prized options like .web or .startup.

Should Startups Consider Bidding On One Of These New Generic Top Level Domains?

Speaking of startups, if you’re a brand-new company looking to join in on the gTLD bidding fun, you may want to slow your roll – unless, you have $200,000 lying around to spend on a proposal. (That’s right, just the proposal; you have to pay them to write a proposal; and there’s no guarantee your wish will be granted.) If a company’s proposal is approved, they will have to shell out approximately $25,000 to maintain the gTLD and commit to a 10-year contract. In laymen’s terms, let’s just say you could buy “onlinemarketing.web” through GoDaddy; instead of it costing $10 – $1000, it would cost $25,000 – and with a required 10-year commitment, it may not make sense for a startup to commit to such a hefty debt from the jump.

If you have a legal domain issue, contact Kelly / Warner law. We have vast experience in the field and can help remedy your situation as quickly as possible. Contact us today to get started.

Internet Lawyer Explains Why Fake Facebook Privacy Policy Isn’t Legal

Uh oh, looks like someone indulged in a little armchair lawyering and launched one of the biggest Internet hoaxes of 2012. Beleaguered social media network Facebook anchors the controversy.

The hoax involves an inaccurate privacy disclaimer that went viral within a few days of Facebook going public. What is the gist of the faux notice? Well, it says that if you post a legal-sounding disclaimer (generously provided free of charge) on your timeline, then the government won’t be allowed to disseminate your content. The notice also averred the faux statement became legal the moment Facebook became a publicly-held company.

Too bad the Faux Facebook privacy policy is legal poppy-cock. Here’s why:

  1. Just because a company or entity switches its status from private to public doesn’t mean the terms you agreed to beforehand become “null and void.” (That’s why it makes sense for website operators to get a rock-solid TOS agreement or privacy policy for your website from the jump.)
  2. The fake Facebook privacy policy is based on the Uniform Commercial Code at Section 1-103 1-308 (the “UCC”).   The problem is that the UCC has nothing to do with privacy at all. In fact, the world “privacy” doesn’t appear in the statute once.
  3. Since its inception, Facebook’s policies have included language that allows them to update their policies whenever they want. While some of those rules may now change a bit, due to the public-ownership, it doesn’t retroactively affect what you already consented to. Simply put, if you agreed to the original Facebook privacy policy, you can’t take it back now. The only thing you can do is delete your account – and even then, per the official terms of use and privacy policy, Facebook is allowed to retain much of your information for an extended period of time.
  4. Legally speaking, there are no United States laws, yet, which allow Internet users to assert their own privacy rights on a platform controlled by someone else. (In fact, the word “privacy” doesn’t even appear in the U.S. Constitution.)

The Truth About Your Privacy And Facebook

United States

At the end of the day, the bottom line is that United States citizens have very little control over their online privacy. While strides are being made by many of the larger Net-based corporations in terms of Internet privacy and data security, there are no national laws that safeguard our personal penetralia. The most any state-side user can do is take advantage of the available privacy settings on websites like Facebook, Google and Twitter; because at the end of the day, if you initially clicked yes on the TOS to join, then you agreed to their rules.

Europe

European users, on the other hand, enjoy a bit more government-mandated online privacy. In fact, as of May 31, 2012, every website in the UK must get consent from users to use tracking cookies. Still, Facebook earned  their “safe harbor” privacy certificate, which means their policies comply with stricter EU privacy directives. So, unless the social media network is engaging in some shady behind-the-scenes trickery, in the eyes of the law, they’re complying with all mandatory privacy standards.

So what is the true moral of this story: if you are very concerned about your privacy, don’t set up an account on any social media sites – including Facebook, Twitter and Google.

Below is a version of the fake Facebook Privacy Policy that’s been making its way across the Internet.

For those of you who do not understand the reasoning behind this posting, Facebook is now a publicly traded entity. Unless you state otherwise, anyone can infringe on your right to privacy once you post to this site. It is recommended that you and other members post a similar notice as this, or you may copy and paste this version. If you do not post such a statement once, then you are indirectly allowing public use of items such as your photos and the information contained in your status updates.

PRIVACY NOTICE: Warning – any person and/or institution and/or Agent and/or Agency of any governmental structure including but not limited to the United States Federal Government also using or monitoring/using this website or any of its associated websites, you do NOT have my permission to utilize any of my profile information nor any of the content contained herein including, but not limited to my photos, and/or the comments made about my photos or any other “picture” art posted on my profile.

You are hereby notified that you are strictly prohibited from disclosing, copying, distributing, disseminating, or taking any other action against me with regard to this profile and the contents herein. The foregoing prohibitions also apply to your employee, agent, student or any personnel under your direction or control.

The contents of this profile are private and legally privileged and confidential information, and the violation of my personal privacy is punishable by law. UCC 1-103 1-308 ALL RIGHTS RESERVED WITHOUT PREJUDICE

FTC’s Dot Com Disclosures: The SparkNotes-Esque Version

FTC Dot Com Disclosures
Federal Trade Commission’s Dot Com Disclosures

In 2000, the FTC formalized online marketing rules by creating and distributing a set of Internet advertising guidelines. After analyzing issues unique to online promotion, the commission published the “Dot Com Disclosures” — a.k.a., the online marketing bible for the United States.

An 83-page document, the Dot Com Disclosures clarifies how established regulations concerning “unfair and deceptive” sales and marketing techniques translate to online efforts.

While the document is wordy, the gist is this: Don’t try to game people using coding and design trickery. Below is a breakdown of the Dot Com Disclosure points.

Dot Com Disclosures Point #1: Placement and Proximity

One of the main issues outlined in the FTC’s Dot Com document deals with the proximity of disclosures to the statement or advertisement being offered. Essentially, it states that any policy link or required statement should be as close to the “relevant claim.” In other words, the Dot Com Disclosure makes clear that you cannot publish marketing collateral one place and then put the necessary disclosure, or conspicuous link to the necessary disclosure, in another place.

Dot Com Disclosures Rule #2: Label Correctly

If a disclosure link is not labeled properly, the FTC may come after you. In other words, policy links must be evident. Trying to mask disclosures and links to disclosures may get you in big trouble with the Federal Trade Commission. As such, when designing an online or mobile ad, and you’re not sure whether or not your disclosure link would pass FTC labeling muster, it’s best to consult with an FTC attorney. The $150 you would spending having an Internet lawyer review your online or mobile ad could save you from a rumble with the commission.

Dot Com Disclosures Rule #3: Link Consistency

The FTC cares about your website’s design. And they’re particularly picky about the site’s link style. In an effort to ensure that users can distinguish links from regular text, the FTC says that links on any given ad must be consistent and distinguishable. In other words, don’t try to trick people by doing something devious with a given link.

Dot Com Disclosures Rule #4: No Circuitous Linking

If you have a link on an ad that leads to a disclosure, the link must take the user directly to the appropriate information. Again, trying to defraud users with link trickery will raise the ire of the FTC.

Dot Com Disclosures Rule #5: You’re Responsible For Monitoring Others

The Dot Com Disclosure also lays down the law regarding the monitoring of affiliate marketing networks. The gist of their position: If you have affiliates hawking your wares, you have a responsibility to monitor their actions to ensure they’re not engaging in nefarious activities with regards to the marketing of your product. Now, of course this varies case to case, as sometimes it’s impossible for the affiliate operator to tell that one of their affiliates is engaging in something illegal, but as a general rule of thumb, it’s important to monitor your network and take measures against any affiliates who are not following the Dot Com Disclosure rules.

If you run an affiliate marketing network and need a lawyer to look things over, give us shout. It’s an inexpensive flat fee to do so and could save you a giant FTC headache down the road.

New FTC Rules For Kid App Developers

Federal Trade Commission Logo
Federal Trade Commission Announces New COPPA Focus. Target Kids Apps.

Buckle up app developers, The FTC is making moves. This time they have their sights set on kids’ apps.

Last week, the commission announced the results of study analyzing how apps in the Android Market and Apple App Store disclose data collection information.

The FTC wasn’t psyched about their findings; they’re now looking into enforcement measures for applications that don’t include an easily digestible data and privacy policy.

About The FTC Kid’s App Study

In the kid’s app study, the FTC looked at about 1000 of the top kid’s apps on both the Apple and Android online stores (500 each). The findings are detailed and can be found here.

The gist of the conclusion: in “most instances” kid’s apps didn’t have proper policies and features explaining what data was collected and how it would be used.

New COPPA Rules On The Way For Kids Apps

In the announcement, the FTC announced it was also working on amendments to the Children’s Online Privacy Protection Act (COPPA). Due to consumer pressure, and a changing technological landscape, provisions for mobile apps are expected to be added to the federal children’s online privacy bill soon.

Update: The FTC made the proposed COPPA changes for kids’ apps official at the end of December 2012.

FTC Heat Forcing New Apple and Android Developer Procedures

“Developers should provide simple disclosures that explain what information an app collects, how it will be used, and with whom it will be shared,” explained the FTC. Developers should also disclose if the app connects with social media or includes targeted ads.

Simple privacy policies and disclosures, which clearly delineate what type of information an app collects and how it will be used is the key to keeping the FTC off your back.

In other words, since COPPA is the current law of the land – and the FTC has the power to enforce COPPA standards and levy hefty fines – it would behoove all developers to get a privacy policy ASAP.

Currently, the Apple Marketplace doesn’t require developers to disclose whether or not they share information, but the company insists they reject programs that target children for data collection. Due to the new FTC focus on kids’ apps, Apple will now require applicants to divulge this information when submitting work for review.

The Android market does currently require developers to include descriptions of their data dealings as it relates to their apps — but expect them to also tighten their standards.

Industry Reactions To The Kid’s App Study & Statement

A representative from the Association for Competitive Technology – an app developer advocacy group – pointed out that many developers aren’t being malicious, but instead simply don’t know about the laws associated with selling mobile apps and various federal and state privacy statues. The rep also cautioned, “We also believe that while the overwhelming majority of children’s app makers are well-intentioned, if there are those who operate with malice outside the law, we fully endorse regulatory action by the FTC.”

The Center for Digital Democracy, in support of the FTC’s new rules said, “Both Google and Apple, the two leading mobile app companies, must do a much better job protecting children’s privacy.”

So what should you do if you’re a kids app developer? Consult with a technology lawyer and make sure your program is hooked up with the correct policies. An app lawyer will also walk you through the rules and advise on “how far you can go” without breaking the law.

Right of Publicity Law: Courts Declared Everyone’s A Celebrity On Facebook

Right of Publicity laws
A California court ruled that everyone is a celebrity! What does that mean for Internet law?

At the end of 2011, a California court reached a ground-breaking decision. The case was Fraley, et al. v Facebook. The matter at hand was whether or not Facebook’s “sponsored stories” infringed on various state and federal rights, including “rights of publicity.” The court’s ruling is significant because their decision means Facebook users are now legally considered “famous to their Friends” – a declaration with Internet law implications.

What Is Right of Publicity?

Essentially, “right of publicity” regulations forbid entities to use an individual’s name or likeness without said person’s express consent. For example, a company selling widgets can’t slap Bill Gates’ picture on an advertisement without getting permission from the Microsoft founder first.  Neither can they put a testimonial from Gates on their marketing material without consent.

Notable exceptions to publicity rights exist. First and foremost, publicity rights are state-based and only 19 currently acknowledge the tort. Moreover, newsworthiness trumps publicity rights; as a result, many defend charges by arguing the given matter was of interest to the public. Legal precedent also says that people seeking public office and criminals forfeit their right to these types of privacy protections when stepping into the limelight willingly or through illegal acts.

How Sponsored Stories Work On Facebook

If you’re one of the millions with a Facebook account, then you’ve probably seen a sponsored story or ten. They’re the advertisements along the sidebar. Sponsored stories are usually coupled with images of Facebook users who’ve “liked” the thing being advertised.

What you may not know is that there’s no way to universally opt-out of seeing sponsored stories (you can close them individually). You also can’t opt-out of appearing in them.

Plaintiffs’ Claims Right of Publicity Claims

The group suing Facebook over “sponsored stories” claim the program violates California’s right of publicity statutes. Claimants are using the fact that the price of a standard Facebook advertisement is significantly less than a sponsored story. In essence, the Plaintiffs are saying, “hey look, We’re ‘famous’ to our friends on Facebook, so Facebook can’t use my likeness without financially compensating me.”

In the lawsuit, in addition to California’s Right of Publicity statute, the petitioners argue Facebook is in violation of California’s Unfair Competition Law, various common law regulations, the Business and Professions Code and doctrines of unjust enrichment.

Defendant’s Argument

Facebook’s defense is simple: What people are “liking” on social media sites is newsworthy. And since the Plaintiffs are also claiming their own “fame,” Facebook may very well throw the claimants argument back in their faces for the win.

Will The Internet Change Test Right of Publicity Statutes?

Newsworthiness is the legal axis on which publicity laws balance. As we continue to embrace a gadget-friendly, user-generated existence, the elusive line of what constitutes online privacy will continue to be questioned. Does a person with a one-hit viral video forever give-up their right to privacy? Will every person with a cat blog be considered “famous” or “newsworthy”? Moving forward, courts will be forced to answer the age-old question as to how “newsworthy” is defined in the eyes of the law. Is it anything people are interested in? Or is it something that judges define? Either way, the result could prove problematic if taken to the extreme.

The California court denied Facebook’s request to dismiss the case all together, but they did rule that Facebook users, are, indeed, “famous” to their friends. (So, if you’re one of those people who thinks of yourself as a celebrity, now you can say the US Courts agree.) The judge also threw out the claim that Facebook was “unjustly enriched.”

The implications of this Facebook lawsuit are huge. After all, as Mark Zuckerberg  said, “trusted referrals” are the “Holy Grail of Advertising” – and if companies can get the courts to agree that “everyone is famous and therefore newsworthy” the online legal landscape could be forever altered in ways that privacy stalwarts will find alarming.

It’s Not the Size of the Privacy Policy That Matters, It’s The Language

So, you’ve started an online business and you’re not sure what kind of privacy policy you need. Can it be a free one you find online? Should it be filled with lots of legalese to make it sound more professional? How long does your privacy policy need to be?

If these questions have been on your mind, you’re about to find out the answers from Aaron Kelly – an Internet law specialist who has helped hundreds of companies –both big and small – with their online contract needs.

Q: Is it fine to just use a free online privacy policy I find on the Internet?

A: Sure, it’s fine; but the real question is whether or not it’s smart to do so. If you don’t have a legal background, it’s not advisable to grab any ol’ free contract you find online. Who knows what provisions may be hidden within the legalese. By using a free online privacy policy, you may actually find yourself in a lot of hot legal water since you didn’t understand the provisions contained within.

Q: Should the privacy policy I use be filled with tons of legal-ease?

A: Most people think that having a privacy policy that’s filled with lots of big legal words is the best way to go, but they’re actually wrong. Laws are changing, and these days, it’s more important to have a privacy policy that people – even ones to haven’t attended law school – can understand.
The best privacy policies are ones that are easily understandable, yet contain the necessary provisions to protect you against legal action.

Point in case, Google. Just recently, they launched a huge public relations campaign to unveil their new, shorter, easily-understandable privacy policy. If laws weren’t headed that way, the Internet mega-corp wouldn’t have made the move. In other words, the fact that Google is sprucing up their online privacy policy to be digestible by the masses, means that you, too, should be doing the same thing.

Q: How long should a privacy policy be?

A: The length of a privacy policy is directly related to the type of website it governs. If you have a simple website that only collects data via a contact form, you’re privacy policy will be much shorter than someone who operates an e-commerce site.

Internet law is changing, and while there is currently no explicit statute that governs all online privacy, there are several different rules which make having an online privacy policy a must for most websites in operation today.


If you have a website and have yet to protect it with an attorney-approved, easy-to-understand privacy policy, get one soon.
It could save you a giant legal headache down the road. And remember, it’s not the size of the policy that matters, instead, it’s the readability that matters.

ATTN Online Marketers: New FCC Text Message Advertising Laws Will Force A Change In The Way You Do Business

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The FCC Recently Announced New Text Messaging Regulations That Will Change the Online Marketing Landscape.

New Text Message Advertising Laws

“Too many telemarketers, aided by auto-dialers and pre-recorded messages, have continued to call consumers who don’t want to hear from them,” began FCC Chairman, Julius Genachowski, upon announcing a new set of FCC marketing regulations set to be enacted this year.

Last Wednesday, February 15, the Federal Communications Commission (FCC) announced a whopper of a telemarketing rule change. The new statues will take affect after publication in the Federal Registrar, which usually takes between two to six months.

Every online advertiser should run, not walk, to ensure they’re in compliance with these new text message advertising statutes, as the FCC does not mess around when it comes to initiating investigations. And if they find you guilty, you could be looking down the barrel of a quarter million dollar fine.

So what are these new, possibly marketing-channel-killing, rules? It’s all outlined below.

New FCC Robocall and Text Message Advertising Laws

Simply stated, the new FCC robocall and text message advertising laws make it illegal for telemarketers to place calls or send texts without express written consent from the consumer. Additionally, People must always be given an opportunity to opt-out – even after opting-in.

The new FCC statues only apply to telemarketers – public schools, pharmacies and politicians still have carte blanche to robocall and text unsolicited messages to their heart’s content.
The FCC is urging private citizens to use the “do-not-call” list as protection in the event of a rogue robocall or text message.

Major Changes From The Old Telemarketing Laws

The major change is the elimination of the “preexisting business” provision. Under the new laws, marketers cannot claim “implied consent” simply because a consumer had previously done business with a given entity.

Another notable change is that automated text messages now join the legal-ranks of automatically dialed and prerecorded telephone messages.

What The New FCC Text Message Advertising Laws Mean For Internet and Mobile Advertisers

So, what does this all mean for you ninjas of Internet and affiliate marketing?
Perhaps most importantly, you should be aware that the new rules could potentially kill some “offer paths” — depending on how you choose to set up the required business processes.

Super-safe compliance would mean an opt-in notice at the top of the transaction. That being said, the laws are still brand new and untested – so you may be able to get away with a checkbox of acceptance right before the point where one would have to, say, enter their phone number.

Your best bet is to contact an Internet lawyer well-versed in FCC and FTC regulations for counsel. This law change is a major one, and you don’t want to get caught with your pants down.

A Final Warning About The New FCC Text Message Advertising Laws

If you use text messaging as a marketing tool, get in touch with an online advertising lawyer today. This law change is not to be ignored – getting caught could cost you your business. After the new telemarketing laws are published in the Federal Registrar, you’ll have 12 months to establish a written consent process and only 90 days to implement an interactive opt-out mechanism for any automated text-message ads you send.

The sentence “Any type of phone call or text to a wireless device needs written consent,” which was spoken by an FCC representative at the announcement, should be on the top of every online advertiser’s mind.

Want to make sure you’re implementing the new FCC text message advertising standards correctly? Contact Aaron Kelly – an Internet lawyer who has a special talent for identifying the “tech” in “technicality.”

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