Interactive Counsel

Arent Fox's interactive media law blog - latest news and trends in advertising, data security & privacy, and IP.

Interactive Counsel
Supreme Court to Decide Whether Victim of Privacy Breach Can Recover Damages Without Showing Harm

There is a split among circuit courts over whether a company faced with a privacy breach is subject to liability where a consumer suffers no discernible harm. The Supreme Court will hear a case this fall, Spokeo, Inc. v. Robins, that will settle this important issue. The Court’s decision in Spokeo, expected in 2016, will likely have far-reaching implications for consumer privacy and data breach lawsuits filed under a number of federal statutes.
 
Plaintiff Thomas Robins filed a putative class action against Spokeo in federal court in California under the Fair Credit Reporting Act (FCRA), claiming that Spokeo willfully violated the FCRA by disseminating inaccurate information about him on its website. The district court dismissed Robins’s complaint for lack of standing, reasoning that Robins failed to allege any actual harm that was traceable to Spokeo’s alleged statutory violations. 
 

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Big Brother for Hire: FTC Cracks Down on Consumer Tracking Company

What’s the News?
 
The Federal Trade Commission (FTC) sent a new warning for companies engaged in geolocation tracking. Specifically, the FTC recently reached a settlement agreement with Nomi Technologies (Nomi), a company that offers services allowing retailers to track the movements of customers in and around their stores. The FTC claimed that Nomi engaged in unfair and deceptive practices by failing to provide an opt-out for consumers subject to the tracking, despite contrary assurances in the company’s privacy policy.
 
Nomi’s Tracking Technology
 

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Advertisers Beware: New FTC Guidance Signals Tough Stance on Endorsements

The Federal Trade Commission (FTC) recently released new guidance regarding the use of endorsements in advertising. The new guidance is a “must read” for marketers that feature endorsements from celebrities or consumers in their advertising, as well as for any companies that operate contests or sweepstakes on social media.
 
What is an Endorsement?

An “endorsement” is an advertising message (including verbal statements, demonstrations, or depictions) that consumers are likely to believe reflects the opinions, beliefs, findings, or experiences of a party other than the sponsoring advertiser. Under the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (Endorsement Guides), endorsements must reflect the honest opinion of the endorser and can’t be used to make a claim that the product’s marketer could not legally make on their own.
 

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Advertising
When Inaccurate Simulations Lead to Litigation and Settlements

What’s the News?
 
Publisher Sega of America, Inc. (Sega) and developer Gearbox Software, L.L.C. (Gearbox) are involved in a battle centered around Aliens: Colonial Marines (ACM), a videogame based upon the hit film Aliens.  The case is one involving unmet expectations – advertising and demonstrations that did not accurately reflect the final product. 
 
Factual Background
 

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Privacy & Security
Agreement Reached on Sale of Consumer Data in RadioShack Bankruptcy

What’s the News?
 
A US Bankruptcy Judge recently approved the sale of a package of RadioShack’s intellectual property assets—including consumer data obtained from RadioShack customers—to General Wireless Inc., the hedge fund affiliate that acquired over 1,700 RadioShack stores in February. The sale was not without controversy.

Major technology companies Apple, Inc. and AT&T Mobility Inc., as well as state and federal regulators, flagged concerns about the disposition of consumer data through the iconic technology retailer’s unwinding. In order to resolve these issues, the agreement approved by the judge places strong limitations on the consumer data that RadioShack will convey to General Wireless. Given that bankruptcy law imposes relatively few limitations on the transfer of consumer data, the conditions placed on this sale could become a standard to which other courts look for guidance.
 

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Privacy & Security, Song-Beverly Act
Court Finds Online Data Collection Legal under California’s Song-Beverly Act

What’s the News?

A California appeals court recently held in Ambers v. Beverages & More, Inc. that retailers are permitted under state law to request customers’ personal information when goods are purchased online but picked up in person. While California’s Song-Beverly Credit Card Act (Song-Beverly) prohibits the collection of personal information in connection with many in-store transactions, courts have found it to have limited applicability to online purchases. Although the plaintiff Michael Ambers did collect the purchased goods in person, the court found that the transaction was completed online and, thus, that defendant BevMo had not violated the law by asking him to provide his address and telephone number.

This case is the latest in an ongoing effort by California courts to determine the scope of Song-Beverly—adopted in the 1971—in the digital economy.

More on the Case

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Brave New World: Wearable Devices Pose Security Challenge for Businesses

With the release of the Apple Watch, a number of companies are likely to grapple with an increasingly common problem: how to secure sensitive company data and information in the age of wearables.
 
The Apple Watch may be the most high-profile wearable to hit the market, but wearables – electronic devices that are connected to the Internet – are an increasingly common tool for consumers. This trend is only expected to increase, with some analysts dubbing 2015 the “year of the wearable.”
 

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Privacy & Security
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Arent Fox Wins $69 Million Judgment in Fraud and Trademark Infringement Case

On March 17, 2015, Arent Fox LLP secured a summary judgment of more than $69 million for SD-3C, LLC when a federal judge ruled that two Chinese companies and four of their executives were guilty of fraud, trademark infringement, and breach of contract after underreporting sales and royalties on the sale of memory card technology licensed by SD-3C.

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Prepaid & Stored Value Cards, Promotions, Sweepstakes & Contests
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The Gift that Keeps on Giving: New Jersey Backs Down a Little on Gift Card Requirements

New Jersey Gov. Chris Christie recently signed a bill amending the state’s gift card law to eliminate the consumer data collection requirements. The law previously required companies operating in New Jersey to maintain records of the name, address, and ZIP code of gift card purchasers. Much to the relief of retailers, the new bill eliminates this requirement.

As background, the gift card law previously imposed two major requirements on covered merchants. First, after a dormancy period of five years, it required the value remaining on stored value cards to escheat to the state to be held in an account for consumers that want to claim the funds. Second, it required any companies operating within the state to maintain records of all gift card purchasers’ names, addresses, and ZIP codes. Now, following this recent amendment, retailers will be relieved of the second requirement.

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Payment Processing, Electronic Fund Transfers & Mobile Payments, Prepaid & Stored Value Cards, Privacy & Security
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Federal Judge Approves Target’s $10 Million Settlement for Consumer Class Action Lawsuit over 2013 Data Breach

On March 19, 2015, a Minnesota federal judge granted preliminary approval of Target Corporation’s (Target) proposed $10 million settlement of a class action lawsuit, which arose out of a 2013 data breach that compromised personal information of roughly 110 million of Target’s customers. The proposed settlement would pay out $10 million to the plaintiffs and up to $6.75 million in attorney fees. Consumers affected by the breach could be awarded up to $10,000 in damages each if they can prove damages.

This case is significant for two main reasons. First, the fact that the plaintiffs were able to defeat a motion to dismiss for lack of standing to sue indicates that the bar may be lowering for successfully alleging injury in data breach lawsuits. Second, the Court’s approval of the proposed settlement raises the question of whether the settlement amount will become a benchmark in  future data breach cases.

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ABOUT ARENT FOX LLP

Arent Fox LLP, founded in 1942, is internationally recognized in core practice areas where business and government intersect. With more than 350 lawyers, the firm provides strategic legal counsel and multidisciplinary solutions to clients that range from Fortune 500 corporations to trade associations. The firm has offices in Los Angeles, New York, San Francisco, and Washington, DC.