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What Do I Need To Look For In A Privacy Policy?

Thursday, May 3rd, 2012

Privacy policies are long, onerous and boring. Most consumers never read them, even though they constitute a binding contract. Here is a handy checklist of some quick things to skim for.

As we’ve previously discussed, even “non-sensitive” information can be very sensitive under certain circumstances. When reviewing a company’s privacy policy, you should focus on determining the following:

  • The type of information is gathered by the website, including information which is voluntarily provided (i.e., name, date of birth, etc.) and electronic information (i.e., tracking cookies).
  • What information is optional (i.e., requested but not required for website use) versus what information you must provide if you want to use the website.
  • With whom your information is shared, and if it is shared with affiliates, you should learn the identity of the affiliates.  The more information you provide, the more concerned the user should be about this answer.
  • How your information is used (i.e., for targeted advertising, for general marketing, for selling data to third-parties, etc.).  Similar to above, the more information you provide, the more concerned the user should be about this answer.
  • How long the website retains your information, and similarly, what rights you have to have all of your information deleted by the website (including information the website has already shared with third-parties).

Generally speaking, all website users should start with the assumption that all information provided is optional and will ultimately be shared with other companies or individuals.  Starting with that assumption then makes it easier psychologically to skim through the privacy policy or terms and conditions and pick out the exceptions which may protect your privacy.  If you are unable to quickly pick out those exceptions, or if the language is too confusing, the user should proceed with caution and assume his or her information will not be kept confidential – a decision which will dictate how and whether you proceed on the website.  Better to be safe than sorry with the information you provide.

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Concerns That Mobile Devices Present For Hedge Fund Managers (Part 3)

Thursday, April 26th, 2012

OlenderFeldman LLP’s Aaron Messing was interviewed by Jennifer Banzaca of the Hedge Fund Law Report for a three part series entitled, “What Concerns Do Mobile Devices Present for Hedge Fund Managers, and How Should Those Concerns Be Addressed?” (Subscription required; Free two week subscription available.) Some excerpts of the topics Jennifer and Aaron discussed follow from the third part.

Preventing Access by Unauthorized Persons

This section highlights four steps that hedge fund managers can take to prevent unauthorized users from accessing a mobile device or any transmission of information from a device.  Concerns over unauthorized access are particularly acute in connection with lost or stolen devices.

First, Kevin Levy, a Shareholder at Gunster, Yoakley & Stewart, P.A., recommended that firms require the use of passwords or personal identification numbers (PINs) to access any mobile device that will be used for business purposes.  Levy explained, “It is an extra step that many people do not want to be bothered with, but it really is the simplest thing you can do to add a layer of protection.”  Aaron Messing, a Corporate & Information Privacy Associate at OlenderFeldman LLP, further elaborated, “We generally emphasize setting minimum requirements for phone security.  You want to have a mobile device lock with certain minimum requirements.  You want to make sure you have a strong password and that there is boot protection, which is activated any time the mobile device is powered on or reactivated after a period of inactivity.  Your password protection needs to be secure.  You simply cannot have a password that is predictable or easy to guess.”  As for what constitutes a strong password, Michael K. Lavine, Ph.D., General Manager at Securetelecommunications.com, noted that there are three key best practices for password security: “First, the password should be sufficiently long (e.g., 16 characters).  Second, the password should incorporate alphabetical (e.g., upper and lower case), numeric and special characters.  Third, the password should be changed frequently; every 30-45 days is a good benchmark.”

Second, firms should consider solutions that facilitate the wiping (i.e., erasing) of firm data on the mobile device to prevent access by unauthorized users.  Steve Ganis, a Counsel at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., explained, “With this greater concern for sensitive information being lost or stolen, we’ve seen firms require passwords to access the mobile device and to have the ability to remotely wipe them out.  Not all of today’s mobile devices support such technology yet, and that is a concern for hedge fund managers.”

Nonetheless, there are numerous available wiping solutions.  For instance, the firm can install a solution that will facilitate remote wiping of the mobile device if the mobile device is lost or stolen.  Also, to counter those that try to access the mobile device by trying to crack its password, a firm can install software that automatically wipes firm data from the mobile device after a specific number of failed log-in attempts.  Messing explained, “It is also important for firms to have autowipe ability – especially if you do not have a remote wipe capability – after a certain number of incorrect password entries.  Often when a phone is lost or stolen, it is at least an hour or two before the person realizes the mobile device is missing.”

Wipe capability can also be helpful when an employee leaves the firm or changes mobile devices.  Ojas Rege, Vice President of Strategy at MobileIron, explained, “If that individual leaves the firm, you can retire that mobile device, meaning all the enterprise data gets pulled off that mobile device, the WiFi and virtual private network (VPN) connectivity gets terminated and enterprise apps get pulled off that mobile device.  With the push of a button that mobile device gets turned back into a purely personal device.”   Messing further elaborated, “When an employee leaves, you should have a policy for retrieving proprietary or sensitive information from the employee-owned mobile device and severing access to the network.  Also, with device turnover – if employees upgrade phones – you want employees to agree and acknowledge that you as the employer can go through the old phone and wipe the sensitive aspects so that the next user does not have the ability to pick up where the employee left off.”

If a firm chooses to adopt a wipe solution, it should adopt policies and procedures that ensure that employees understand what the technology does and obtain consent to the use of such wipe solutions.  Messing explained, “What we recommend in many cases is that as a condition of enrolling a device on the company network, employees must formally consent to an ‘Acceptable Use’ policy, which defines all the situations when the information technology department can remotely wipe the mobile device.  It is important to explain how that wipe will impact personal device use and data and employees’ data backup and storage responsibilities.”

Third, a firm should consider adopting solutions that prevent unauthorized users from gaining remote access to a mobile device and its transmissions.  Mobile security vendors offer products to protect a firm’s over-the-air transmissions between the server and a mobile device and the data stored on the mobile device.  These technologies allow hedge fund managers to encrypt information accessed by the mobile device – as well as information being transmitted by the mobile device – to ensure that it is secure and protected.  For instance, mobile devices can retain and protect data with WiFi and mobile VPNs, which provide mobile users with secure remote access to network resources and information.

Fourth, Rege suggested hedge fund managers have a procedure for requiring certificates to establish the identity of the device or a user.  “In a world where the devices are changing constantly, having that mechanism to make sure you always know what device is trying to access your system becomes very important.”

Preventing Unauthorized Use by Firm Personnel

Hedge fund managers should be concerned not only by potential threats from external sources, but also potential threats from unauthorized access and use by firm personnel.

For instance, hedge fund managers should protect against the theft of firm information by firm personnel.  Messing explained, “You want to consider some software to either block or control data being transferred onto mobile devices.  Since some of these devices have a large storage capacity, it is very easy to steal data.  You have to worry not only about external threats but internal threats as well, especially when it comes to mobile devices, you want to have system controls that are put in place to record and maybe even limit the data being taken from or copied onto mobile devices.”

Monitoring Solutions

To prevent unauthorized access and use of the mobile device, firms can consider remote monitoring.  As MobileIron’s Rege noted, “The software definitely exists to monitor mobile devices.”  However, monitoring solutions raise employee privacy concerns, and the firm should determine how to address these competing concerns.

Because of gaps in expectations regarding privacy, firms are much more likely to monitor activity on firm-provided mobile devices than on personal mobile devices.  Rege further elaborated, “Privacy policies are also different with firm and personal devices.  In most organizations, with a firm-owned device, there is no such thing as privacy.  The company can monitor everything on that mobile device.  If the device is the employee’s own mobile device, most companies are not going to do that.”

In addressing privacy concerns, Messing explained, “You want to minimize the invasion of privacy and make clear to your employees the extent of your access.  When you are using proprietary technology for mobile applications, you can gain a great deal of insight into employee usage and other behaviors that may not be appropriate – especially if not disclosed.  We are finding many organizations with proprietary applications tracking behaviors and preferences without considering the privacy implications.  Generally speaking, you want to be careful how you monitor the personal device if it is also being used for work purposes.  You want to have controls to determine an employee’s compliance with security policies, but you have to balance that with a respect for that person’s privacy.  When it comes down to it, one of the most effective ways of doing that is to ensure that employees are aware of and understand their responsibilities with respect to mobile devices.  There must be education and training that goes along with your policies and procedures, not only with the employees using the mobile devices, but also within the information technology department as well.  You have people whose job it is to secure corporate information, and in the quest to provide the best solution they may not even consider privacy issues.”

As an alternative to remote monitoring, a firm may decide to conduct personal spot checks of employees’ mobile devices to determine if there has been any inappropriate activity.  This solution is less intrusive than remote monitoring, but likely to be less effective in ferreting out suspicious activity.

Policies Governing Archiving of Books and Records

Firms should consider both technology solutions and monitoring of mobile devices to ensure that they are capturing all books and records that are required to be kept pursuant to the firm’s books and records policies and external law and regulation with respect to books and records.

Also, firms may contemplate instituting a policy to search employees’ mobile devices and potentially copying materials from such mobile devices to ensure the capture of all such information or communications from mobile devices.  However, searching and copying may raise privacy concerns, and firms should balance recordkeeping requirements and privacy concerns.  Messing explained, “In the event of litigation or other business needs, the company should image, copy or search an employee’s personal device if it is used for firm business.  Therefore, employees should understand the importance of complying with the firm’s policies.”

Policies Governing Social Media Access and Use by Mobile Devices

Many firms will typically have some policies and procedures in place that ban or restrict the proliferation of business information via social media sites such as Facebook and Twitter, including with respect to the use of firm-provided mobile devices.  Ganis explained, “We are seeing firms ban access to social media sites.  Firms that do allow access to those sites tend to have a policy that you cannot use them to discuss the firm’s business or to discuss products or services.”  Specifically, such a policy could include provisions prohibiting the use of the firm’s name; prohibiting the disclosure of trade secrets; prohibiting the use of company logos and trademarks; addressing the permissibility of employee discussions of competitors, clients and vendors; and requiring disclaimers.

Messing explained, “We advise companies just to educate employees about social media.  If you are going to be on social media, be smart about what you are doing.  To the extent possible, employees should note their activity is personal and not related to the company.  They also should draw distinctions, where possible, between their personal and business activities.  These days it is increasingly blurred.  The best thing to do is just to come up with common sense suggestions and educate employees on the ramifications of certain activities.  In this case, ignorance is usually the biggest issue.”

Ultimately, many hedge fund managers recognize the concerns raised by mobile devices.  However, many also recognize the benefits that can be gained from allowing employees to use such devices.  In Messing’s view, the benefits to hedge fund managers outweigh the costs.  “Everything about a mobile device is problematic from a security standpoint,” Messing said, “but the reality is that the benefits far outweigh the costs in that productivity is greatly enhanced with mobile devices.  It is simply a matter of mitigating the concerns.”  Such mitigation, Lavine concluded, is in large measure a matter of training, trust and crafting of appropriate policies.  The most effective approach to mobile device security “is to have is to have the proper policies, procedures and operating practices in place and to develop a security culture among employees.  Trust is an essential element in mobile device security specifically, as a subset of the employer-employee relationship generally.”

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Concerns That Mobile Devices Present For Hedge Fund Managers (Part 2)

Thursday, April 19th, 2012

OlenderFeldman LLP’s Aaron Messing was interviewed by Jennifer Banzaca of the Hedge Fund Law Report for a three part series entitled, “What Concerns Do Mobile Devices Present for Hedge Fund Managers, and How Should Those Concerns Be Addressed?” (Subscription required; Free two week subscription available.) Some excerpts of the topics Jennifer and Aaron discussed follow from the second part.

Three Steps That Hedge Fund Managers Should Take before Crafting Mobile Device Policies and Procedures

As indicated, before putting pen to paper to draft mobile device policies and procedures, hedge fund managers should take at least the following three steps.  Managers that already have mobile device policies and procedures in place, or that have other policies and procedures that incidentally cover mobile devices, may take the following three steps in revising the other relevant policies and procedures.

First, Aaron Messing, a Corporate & Information Privacy Lawyer at OlenderFeldman LLP, advised that hedge fund managers should ensure that technology professionals are integrally involved in developing mobile device policies and procedures.  Technology professionals are vital because they can understand the firm’s technological capabilities, and they can inform the compliance department about the technological solutions available to address compliance risks and to meet the firm’s goals.  Such technology professionals can be manager employees, outside professionals or a combination of both.  The key is that such professionals understand how technology can complement rather than conflict with the manager’s compliance and business goals.

Second, the firm should take inventory of its mobile device risks and resources before beginning to craft mobile device policies and procedures.  Among other things, hedge fund managers should consider access levels on the part of its employees; its existing technological capabilities; its budget for addressing the risks of using mobile devices; and the compliance personnel available to monitor compliance with such policies and procedures.  With respect to employee access, a manager should evaluate each employee’s responsibilities, access to sensitive information and historical and anticipated uses of mobile devices to determine the firm’s risk exposure.

As Kevin Levy, a Shareholder at Gunster, Yoakley & Stewart, P.A., explained, “You have to factor in the level of employees, what they are doing with the mobile devices and what they have access to.”  With respect to technology, Messing cautioned that mobile device policies and procedures should be supportable by a hedge fund manager’s current technology infrastructure and team.  Alternatively, a manager should be prepared to invest in the required technology and team.  “You should be sure that what you are considering implementing can be supported by your information technology team,” Messing said.  With respect to budgeting, a hedge fund manager should evaluate how much it is willing to spend on technological solutions to address the various risks posed by mobile devices.  Any such evaluation should be informed by accurate pricing, assessment of a range of alternative solutions to address the same risk and a realistic sense of what is necessary in light of the firm’s business, employees and existing resources.  Finally, with respect to personnel, a manager should evaluate how much time the compliance department has available to monitor compliance with any contemplated mobile device policies and procedures.

Third, hedge fund managers should specifically identify their goals in adopting mobile device policies and procedures.  While the principal goal should be to protect the firm’s information and systems, hedge fund managers should also consider potentially competing goals, such as the satisfaction levels of their employees, as expressed through employee preferences and needs.  As Messing explained, “It is not that simple to dictate security policies because you have to take into account the end users.  Ideally, when you are creating a mobile device policy, you want something that will keep end users happy by giving them device freedom while at the same time keeping your data safe and secure.  One of the things that I emphasize the most is that you have to customize your solutions for the individual firm and the individual fund.  You cannot just take a one-size-fits-all policy because if you take a policy and you do not implement it, it can be worse than not having a policy at all.”  OCIE and Enforcement staff members have frequently echoed that last insight of Messing’s.

Aaron and Jennifer also discussed privacy concerns with the use of personal devices for work:

Firm-Provided Devices versus Personal Devices:

As an alternative, some firms have considered adopting policies that require employees to make their personal phones available for periodic and surprise examinations to ensure compliance with firm policies and procedures governing the use of personal phones in the workplace.  However, this solution may not necessarily be as effective as some managers might think because many mobile device functions and apps have been created to hide information from viewing, and a mobile device user intent on keeping information hidden may be able to take advantage of such functionality to deter a firm’s compliance department from detecting any wrongdoing.  Additionally, Messing explained that such examinations also raise employee privacy concerns.  Hedge fund managers should consider using software that can separate firm information from personal information to maximize the firm’s ability to protect its interests while simultaneously minimizing the invasion of an employee’s privacy.

Regardless of the policies and procedures that a firm wishes to adopt with respect to the use of personal mobile devices by firm personnel, hedge fund managers should clearly communicate to their employees the level of firm monitoring, access and control that is expected, especially if an employee decides that he or she wishes to use his or her personal mobile device for firm-related activities.

Jennifer and Aaron also discussed controlling access to critical information and systems:

Limiting Access to and Control of Firm Information and Systems

As discussed in the previous article in this series, mobile devices raise many external and internal security threats.  For instance, if a mobile device is lost or stolen, the recovering party may be able to gain access to sensitive firm information.  Also, a firm should protect itself from unauthorized access to and use of firm information and networks by rogue employees.  A host of technology solutions, in combination with robust policies and procedures, can minimize the security risks raised by mobile devices.  The following discussion highlights five practices that can help hedge fund managers to appropriately limit access to and control of firm information and networks by mobile device users.

First, hedge fund managers should grant mobile device access only to such firm information and systems as are necessary for the mobile device user to perform his or her job functions effectively.  This limitation on access should reduce the risks associated with use of the mobile device, particularly risks related to unauthorized access to firm information or systems.

Second, hedge fund managers should consider strong encryption solutions to provide additional layers of security with respect to their information.  As Messing explained, “As a best practice, we always recommend firm information be protected with strong encryption.”  Marsh explained that hedge fund managers can determine the degree of encryption that should be provided, depending on whether the device is a firm-provided mobile device or a personal mobile device.  Marsh elaborated: “As a hedge fund manager, you want to make sure that any device that is connecting uses an encrypted connection and encrypts the data.  The manager has much more control over the level of encryption when it is a firm-owned device.”

Third, a firm should consider solutions that will avoid providing direct access to the firm’s information on a mobile device.  For instance, a firm should consider putting its information on a cloud and requiring mobile device users to access such information through the cloud.  By introducing security measures to access the cloud, the firm can provide additional layers of protection over and above the security measures designed to deter unauthorized access to the mobile device.

Fourth, hedge fund managers should consider solutions that allow them to control the “business information and applications” available via a personal mobile device.  With today’s rapidly evolving technology, solutions are now available that allow hedge fund managers to control those functions that are critical to their businesses while minimizing the intrusion on the personal activities of the mobile device user.  For instance, there are applications that store e-mails and contacts in encrypted compartments that separate business data from personal data.  Messing explained, “Today, there is software to provide data encryption tools and compartmentalize business data, accounts and applications from the other aspects of the phone.  There are also programs that essentially provide an encryption sandbox that can be removed and controlled without wiping the entire device.  When you have that ability to segment off that sensitive information and are able to control that while leaving the rest of the mobile device uncontrolled, that really is the best option when allowing employees to use mobile devices to conduct business.  The solutions available are only limited by the firm’s own technology limitations and what is available for each specific device.”  This compartmentalization also makes it easier to wipe a personal mobile phone if an employee leaves the firm, with minimal intrusion to the employee.

Fifth, hedge fund managers should adopt solutions that prohibit or restrict the migration of their information to areas where they cannot control access to such information.  Data loss prevention (DLP) solutions can provide assistance in this area by offering network protection to detect movement of information across the network.  DLP software can also block data from being moved to local storage, encrypt data and allow the administrator to monitor and restrict use of mobile device storage.

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Mobile Device Policies

Thursday, April 12th, 2012

Companies are increasingly allowing their employees to use their own personal mobile devices, such as laptops, tablets, and smartphones, to remotely access work resources.

This “bring your own device” trend can present certain security and privacy risks for companies, especially in regulated industries where different types of data require different levels of security. At the same time, companies need to also be mindful of employee privacy laws.

Most individuals now have personal mobile devices, and companies are finding it increasingly convenient to allow employees (and in certain situations, independent contractors) to access company data and networks through these personally owned devices. However, when an organization agrees to allow employees to use their own personal devices for company business, it loses control over the hardware and how it is used. This creates security and privacy risks with regards to the proprietary and confidential company information stored or accessible on those devices, which can lead to potential legal and liability risk. Similarly, when employees use the same device for both personal and professional use, determining the line between the two becomes difficult. If your company is considering letting its employees use their personal devices in the workplace, you should consult with an attorney to craft a policy that’s right for your business.

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Concerns That Mobile Devices Present For Hedge Fund Managers (Part 1)

Thursday, April 12th, 2012

OlenderFeldman LLP’s Aaron Messing was interviewed by Jennifer Banzaca of the Hedge Fund Law Report for a three part series entitled, “What Concerns Do Mobile Devices Present for Hedge Fund Managers, and How Should Those Concerns Be Addressed?” (Subscription required; Free two week subscription available.) Some excerpts of the topics Jennifer and Aaron discussed follow from the first part.

Eavesdropping

Also, as observed by Aaron Messing, a Corporate & Information Privacy Lawyer at OlenderFeldman LLP, “Phones have cameras and video cameras, and therefore, the phone can be used as a bugging device.”

Location Privacy

Third, many mobile devices or apps can broadcast the location of the user.  Messing explained that these can be some of the most problematic apps for hedge fund managers because they can communicate information about a firm’s activities through tracking of a firm employee.  For instance, a person tracking a mobile device user may be able to glean information about a firm’s contemplated investments if the mobile device user visits the target portfolio company.  Messing explained, “It is really amazing the amount of information you can glean just from someone’s location.  It can present some actionable intelligence.  General e-mails can have a lot more meaning if you know someone’s location.  Some people think this concern is overblown, but whenever you can collect disparate pieces of information, aggregating all those seemingly innocuous pieces of information can put together a very compelling picture of what is going on.”

Additionally, as Messing explained, “Some hedge fund managers are concerned with location-based social networks and apps, like Foursquare, which advertises that users are at certain places.  You should worry whether that tips someone off as to whom you were meeting with or companies you are potentially investing in.  These things are seemingly harmless in someone’s personal life, but this information could wind up in the wrong hands.  People can potentially piece together all of these data points and perhaps figure out what an employee is up to or what the employee is working on.  For a hedge fund manager, this tracking can have serious consequences.  It is hard to rely on technology to block all of those apps and functions because the minute you address something like Foursquare, a dozen new things just like it pop up.  To some degree you have to rely on education, training and responsible use by your employees.”

Books and Records Retention

Messing explained that while e-mails are generally simple to save and archive, text messages and other messaging types present new challenges for hedge fund managers.  Nonetheless, as Marsh cautioned, “Regardless of the type of messaging system that is used, all types of business-related electronic communications must be captured and archived.  There is no exception to those rules.  There is no exception for people using cell phones.  If I send a text message or if I post something to my Twitter account or Facebook account and it is related to business, it has to be captured.”

Advertising and Communications Concerns

OlenderFeldman’s Messing further explained on this topic, “Social media tends to blur these lines between personal and professional communications because many social media sites do not delineate between personal use and business use.  While there is not any clear guidance on whether using social networking and ‘liking’ various pages constitutes advertising, it is still a concern for hedge fund managers.  You can have your employees include disclaimers that their views are not reflective of the views of the company or that comments, likes or re-Tweets do not constitute an endorsement.  However, you still should have proper policies and procedures in place to address the use of social media, and you have to educate your employees about acceptable usage.”

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FTC Releases Final Consumer Privacy Report

Monday, March 26th, 2012

By Aaron Messing

Today, the Federal Trade Commission (FTC) issued a final report setting forth best practices for businesses to protect the privacy of American consumers and give them greater control over the collection and use of their personal data, entitled “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers.” The FTC also issued a brief new video explaining the FTC’s positions.  Here are the key take-aways from the final report:

  • Privacy by Design. Companies should incorporate privacy protections in developing their products, and in their everyday business practices. These include reasonable security for consumer data, limited collection and retention of such data, and reasonable procedures to ensure that such data is accurate;
  • Simplified Choice. Companies should give consumers the option to decide what information is shared about them, and with whom. Companies should also give consumers that choice at a time and in a context that matters to people, although choice need not be provided for certain “commonly accepted practices” that the consumer would expect.
  • Do Not Track. Companies should include a Do-Not-Track mechanism that would provide a simple, easy way for consumers to control the tracking of their online activities.
  • Increased Transparency. Companies should disclose details about their collection and use of consumers’ information, and provide consumers access to the data collected about them.
  • Small Businesses Exempt. The above restrictions do not apply to companies who collect only non-sensitive data from fewer than 5,000 consumers a year, provided they don’t share the data with third parties.

Interestingly, the FTC’s focus on consumer unfairness, rather than consumer deception, was something that FTC Commissioner Julie Brill hinted to me when we discussed overreaching privacy policies and terms of service at Fordham University’s Big Data, Big Issues symposium earlier this month.

If businesses want to minimize the chances of finding themselves the subject of an FTC investigation, they should be prepared to follow these best practices. If you have any questions about what the FTC’s guidelines mean for your business, please feel free to contact us.

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Privacy Lawyer Aaron Messing Presents Legal Considerations for Search and Social at SES New York 2012 Conference

Friday, March 23rd, 2012

Privacy lawyer Aaron Messing gave a presentation on Wednesday at the SES New York 2012 conference about emerging legal issues in search engine optimization (SEO) and online behavioral advertising. The topic of his presentation, Legal Considerations for Search & Social in Regulated Industries, focused on search and social media strategies in regulated industries. Regulated industries, which include healthcare, banking, finance, pharmaceuticals and publicly traded companies, among others, are subject to various government regulations, he said, but often lack sufficient guidance regarding acceptable practices in social media, search and targeted advertising.

Messing began with a discussion of common methods that search engine optimization companies use to raise their client’s sites in the rankings. The top search spots are extremely competitive, and the difference between being on the first or second page can make a huge difference in a company’s bottom line. One of the ways that search engines determine the relevancy of a web page is through link analysis. Search engines examine which websites link to that page, and what the text of those links — the anchor text – says about the page, as well as the surrounding content, to determine relevance. In essence, these links and contents can be considered a form of online citations.

A typical method used by SEO companies to raise website rankings is to generate content, using paid affiliates, freelance bloggers, or other webpages under the SEO company’s control, in order to increase the website’s ranking on search engines. However, since this content is mostly for the search engine spiders, and not for human consumption, the content is rarely screened, which can lead to issues with government agencies, especially in the regulated industries. This content also rarely contains disclosures that the author was paid to create the content, which could be unfair and deceiving to consumers. SEO companies dislike disclosing paid links and content because search engines penalize paid links. Messing said, “SEO companies are caught between the search engines, who severely penalize disclosure [of paid links], and the FTC, which severely penalizes nondisclosure.”

The main enforcement agency is the Federal Trade Commission, which has the power to investigate and prevent unfair and deceptive trade practices across most industries, though other regulated industries have additional enforcement bodies. The FTC rules require full disclosure when there is a “material connection” between a merchant and someone promoting its product, such as a cash payment, or a gift item. Suspicious “reviews” or unsubstantiated content can raise attention, especially in regulated industries. “If a FTC lawyer sees one of these red flags, you could attract some very unwanted attention from the government,” Messing noted.

Recently, the FTC has increased its focus on paid links, content and reviews. While the FTC requires mandatory disclosures, it doesn’t specify how those disclosures should be made. This can lead to confusion as to what the FTC considers adequate disclosure, and Messing said he expects the FTC to issue guidance on disclosures in the SEO, social media and mobile devices areas. “There are certain ecommerce laws that desperately need clarification,” said Messing.

Messing stated that clients need to ask what their SEO company is doing and SEOs companies need to tell them, because ultimately, both can be held liable for unfair or deceptive content. He recommends ensuring that all claims made in SEO content be easily substantiated, and recommended building SEO through goodwill. “In the context of regulated industries,” he said, “consumers often visit healthcare or financial websites when they have a specific problem. If you provide them with valuable, reliable and understandable information, they will reward you with their loyalty.”

Messing cautioned companies to be careful of what information they collect for behavioral advertising, and to consider the privacy ramifications. “Data is currency, but the more data a company holds, the more potential liability it is exposed to.” Messing expects further developments in privacy law, possibly in the form of legislation. In the meantime, he recommends using data responsibly, and in accordance with the data’s sensitivity. “Developing policies for data collection, retention and deletion is crucial. Make sure your policies accurately reflect your practices.” Finally, Messing noted that companies lacking a robust compliance program governing collection, protection and use of personal information may face significant risk of a data breach or legal violation, resulting litigation, and a hit to their bottom lines. He recommends speaking to a law firm that is experienced in privacy and legal compliance for businesses to ensure that your practices do not attract regulatory attention.

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Aaron Messing to Speak at SES NY 2012 about Privacy and FTC Compliance

Monday, March 12th, 2012

By Aaron Messing

I will be speaking at SES New York 2012 conference about emerging legal issues in search engine optimization and online behavioral advertising. The panel will discuss  Legal Considerations for Search & Social in Regulated Industries:

Search in Regulated Industries
Legal Considerations for Search & Social in Regulated Industries
Programmed by: Chris Boggs
Since FDA letters to pharmaceutical companies began arriving in 2009, and with constantly increasing scrutiny towards online marketing, many regulated industries have been forced to look for ways to modify their legal terms for marketing and partnering with agencies and other 3rd party vendors. This session will address the following:

  • Legal rules for regulated industries such as Healthcare/Pharmaceutical, Financial Services, and B2B, B2G
  • Interpretations and discussion around how Internet Marketing laws are incorporated into campaign planning and execution
  • Can a pharmaceutical company comfortably solicit inbound links in support of SEO?
  • Should Financial Services companies be limited from using terms such as “best rates?

Looks like it will be a great panel. I will post my slideshow after the presentation.

(Updated on 3.22.12 to add presentation below)

Search and Social In Regulated Industries

View more presentations from aaronmessing.

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OlenderFeldman LLP Contributes to Report on Protected Health Information

Monday, March 5th, 2012

Protected Health Information Privacy Concerns are Rapidly Increasing

OlenderFeldman LLP’s Aaron Messing contributed to the recently released report entitled, The Financial Impact of Breached Protected Health Information: A Business Case for Enhanced PHI Security, which can be downloaded for free at http://webstore.ansi.org/phi. As the press release correctly notes, protected health information (PHI) “is now more susceptible than ever to accidental or impermissible disclosure, loss, or theft. Health care organizations (providers, payers, and business associates) are not keeping pace with the growing risks of exposure as a result of electronic health record adoption, the increasing number of organizations handling PHI, and the growing rewards of PHI theft.”

The report provides a  5-step method for assessing security risks and evaluating the “at risk” value of an organization’s PHI, including estimating overall potential data breach costs, and provides a methodology for determining an appropriate level of investment needed to strengthen privacy and security programs and reduce the probability of a breach occurrence.

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Big Data, Big Issues Symposium – A Quick Chat with FTC Commissioner Julie Brill

Friday, March 2nd, 2012

By Aaron Messing

I had the pleasure of attending Fordham Law School’s Center on Law & Information Policy (CLIP)’s Big Data, Big Issues Symposium today, which had a fascinating lineup of many of best thinkers in privacy. The Federal Trade Commission (FTC)’s  Julie Brill, delivered a very interesting keynote address about the benefits and dangers of big data, as well as the evolving privacy concerns. The address is well worth a read.

I had a chance to chat with Commissioner Brill after her speech, and asked her thoughts about privacy policies and terms of service that allow for unrestricted and unlimited use of data, such as the infamous Skipity policies. Commissioner Brill stated that, given that most users don’t read privacy policies and terms of service, the FTC is very concerned by these types of one-sided policies. She mentioned that  the aggregation and use of data outside of the context of collection is something that the FTC hopes to issue guidance on in the future, and may well be unfair and deceptive regardless of a consumer’s consent.

My takeaway from the chat is that consumer consent will not insulate a website from FTC scrutiny, and that the reasonable expectations of a consumer may dictate the FTC’s considerations of whether a policy is unfair or deceptive, especially given that so little attention is paid to these policies by consumers. However, at the same time, it is important that policies reflect the company’s actual practices.

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