Alerts

AD-ttorneys@law – May 2, 2018

Alerts / May 2, 2018

In This Issue:

“Save the Babies!” Cries International Computer Science Institute

New study claims to reveal rampant COPPA failures in free kids’ apps

Children and Apps

In a recently published paper − humorously titled “‘Won’t Somebody Think of the Children?’ Examining COPPA Compliance at Scale” − the International Computer Science Institute analyzes the behavior of more than 5,800 Android apps that are offered free to children. The paper purports to measure how well this group of applications complies with the Children’s Online Privacy Protection Act (COPPA).

The findings, if correct, should give every app developer pause − even if they’ve engaged protective measures.

Method

The paper discusses a new method for analyzing these mobile applications. Previously, analysts who attempted to delve into the behaviors of apps would examine the underlying code and attempt to predict the application’s potential future behaviors. In this study, the authors claim to rely on a different, more dynamic method that tracks app behavior in a simulated user environment.

From late 2016 until 2018, their testing platform “scraped” free apps from the Google Play Store and focused on the most popular available apps in the Store. They then winnowed this group down to apps that were enrolled in Google’s “Designed for Families” (DFF) program − a voluntary initiative that identifies apps that target an under-13 audience and attests to the COPPA compliance of those apps.

Uncoveries

In the paper, the authors claimed that most of the apps in the DFF program potentially violate COPPA. The study attributes this to third-party software development kits (SDKs) that companies use to put their apps together. The authors claim that COPPA-compliant options in these SDKs are available, but are simply not used, or in some cases are not properly distributed during development.

The authors also claim that nearly 20 percent of the tested apps gather personal information through the use of SDKs that are identified as being inappropriate for children’s applications.

Interestingly, 28 percent of the apps enrolled in the DFF program, according to the authors, access sensitive data normally protected by Android permissions. Moreover, 73 percent of the apps transmitted sensitive data over the internet. In both groups, parental permission was not requested or given.

The Takeaway

This study also sheds light on compliance issues for some “Safe Harbor” programs, which are agreements in which companies submit apps to industry organizations for review and certification. Companies working within Safe Harbor programs are partially shielded from direct FTC enforcement actions based on their implementation of self-regulatory guidelines.

According to the study, the current roster of apps approved for Safe Harbor programs do not fare well. The paper stated that 41.7 percent of the apps in one Safe Harbor group transmitted location and contact information, such as phone numbers and email addresses, and nearly 46 percent of the first Safe Harbor group did not use encryption to protect the data. In another Safe Harbor group, 77.2 percent of apps transmitted persistent identifiers, which are unique tags identifying users across different websites and services.

The authors end their study by explaining the importance of their new test platform to end users who want to learn more about the apps their kids use and how developers could benefit from testing their apps before release.

Companies and developers creating apps under COPPA’s purview should review the Safe Harbor program requirements as well as COPPA requirements when developing an app. Regulators will continue to analyze apps’ functionalities with respect to children under the age of 13 and will undoubtedly hold companies with violations accountable.

Hat Company, FTC Settle "Made in USA" Suit

“America’s Oldest Hat Maker” doffs patriotic tag lines

The Spat Re: The Hat

In late January 2018, the Federal Trade Commission filed a complaint against the Bollman Hat Co. In the complaint, the FTC took aim at the United States-based company and claimed that, despite its frequent use of patriotic ad slogans and made-in-the-USA claims, the company was selling hats that were manufactured outside the United States.

The FTC also took notice of a seal developed by the company that included the statement “American Made Matters,” which the company licensed for other companies wishing to make “Made in USA” claims for their products. The problem, the FTC maintained, was that requirements to license the seal were too easy to make the claim meaningful. Aside from a nominal fee, any company that “had a United States-based manufacturing factory, or at least one product with a U.S.-origin label” could use the seal.

The Takeaway

In April 2018, Bollman reached a settlement with the FTC. First, the “American Made Matters” certification − or any similar certification the company wanted to create − would have to undergo “an independent and objective evaluation, audit, or verification check” to ensure that it met the standards set up by Bollman. Failing that, the company would have to note in promotional materials that the labeled products might be self-certified.

The settlement stated that the Bollman Hat Co. is prohibited from misrepresenting U.S.-origin claims and prohibited from misrepresenting certifications. It is another example of the FTC taking action against companies who purport to manufacture products in the USA to pander to individuals who favor domestic-based manufacturing companies. This settlement is also a reminder to companies that claims made on products and licensed to other companies must be substantiated and not misleading in order to protect consumers and prevent FTC enforcement actions.

FTC Takes a Bite out of Tooth Scammers

Commish: Online marketing operation was shining bottom line with negative option agreements

False Teeth

Back in July 2017, the Federal Trade Commission launched a suit in the United States District Court of Nevada against three individuals who operated a massive network of more than 75 companies, which, in turn, boasted more than 80 websites and numerous bank accounts. The defendant list alone takes up more than eight pages of the complaint.

The entire business scheme, the FTC maintains, centered on the sale of personal care products, including tooth-whitening “systems.” The products were allegedly pushed through a draconian negative-option scheme, starting at a low “trial” price of around $1 and ballooning up to as much as $200 if cancellations did not take place within a few days.

According to the FTC, the group misled consumers with the aforementioned array of websites, which received streams of traffic from affiliate networks piggybacking on blog posts and surveys. In some cases, the affiliates would create applications that purported to be “customer satisfaction surveys” for well-known vendors. The potential consumer target was offered the discounted first offer for the whitening product, which would lead the consumer into the negative option scheme.

The Takeaway

The defendants were charged with misrepresenting the price of trial offers, violations of the Restore Online Shoppers’ Confidence Act (ROSCA) and illegal negative option marketing.

On April 16, 2018, the individual defendants − company officer Danielle Foss, officer Jennifer Johnson and company owner Blair McNea − settled the charges with the FTC. McNea’s settlement encompassed his charges with the charges of the corporate entities under his control. The individual defendants have been ordered to cease negative-option sales or assisting others in such endeavors. As part of the settlement, the defendants agreed to a fine upwards of $92 million − roughly the amount lost by consumers.

This FTC action and subsequent settlement is another example of the FTC’s attention to ROSCA and potentially misleading negative option cases. Companies seeking to use negative option marketing should always follow the FTC’s guidance by conspicuously disclosing all material terms of the transaction before collecting the consumer’s billing information, obtaining the consumer’s express informed consent to be charged, and providing a simple mechanism to stop recurring charges.

YouTube Celeb Accuses Former Collaborator of Abuse, Theft of Persona

Musician Mars Argo claims that ex-beau Titanic Sinclair is trying to build

Peas in a Pod

Argo (real name Brittany Alexandria Sheets) and her beau Titanic Sinclair (real name Corey Mixter) met in Michigan in 2008. From an initial romance, they became creative collaborators, eventually moving to Los Angeles and starting up their own YouTube channel to spotlight their music and video projects.

Between 2009 and 2014, Sinclair and Argo posted 90 videos to their grocerybag.tv YouTube channel. Today, the content on the channel has been winnowed down to just three videos. The clips feature an odd, deadpan delivery, hipstery couture, ominous atmospheric backing tracks and surreal jumps in topic and tone. Here’s an exchange from one of the remaining videos, “Delete Your Facebook:”

ARGO: “Ambien’s a sleeping pill.”

SINCLAIR: “Tune in next week when we re-enact the death of Phillip Seymour Hoffman.”

ARGO: “Why aren’t we doing that right now?”.

Poppy − Copy?

By Argo’s account, she began building a music career off the popularity of the video series, becoming a recording artist and touring the nation. However, Argo alleges that her relationship with Sinclair had deteriorated by 2014, and the couple split. At that point, she claims, Sinclair began to “harass, stalk, threaten, and abuse” her, leading up to full-on physical assault. She eventually stopped posting content as Mars Argo and left Los Angeles altogether.

The complaint alleged that in 2014, Sinclair began grooming another woman, Moriah Rose Pereira, known as “ThatPoppy” or “Poppy,” as a double of Ms. Argo’s persona through a new eponymous YouTube channel. She claims that Poppy’s presence was a deliberate attempt to copy Argo’s “identity, likeness, expression of ideas, sound, style, and aesthetic.” Points of similarity included Poppy’s platinum blonde hair, clothing, distinctive speaking voice, odd poses, shooting backgrounds and formats, and even specific topics and concepts (the Poppy channel also features a video called “Delete Your Facebook,” for example).

The Takeaway

Argo filed suit in the United States District Court for the Central District of California in April 2018, seeking damages for copyright infringement, violations of right to publicity, violation of the California Business and Professions Code, and domestic violence.

The questions raised by Argo’s lawsuit are fascinating: How much of Argo’s identity was the product of collaboration with Sinclair? How does collaboration affect the right of publicity? Are the similarities between the two separate personas enough to outweigh the differences, and why? How closely related are claims of domestic abuse and violations of right of publicity when the victim is an artist? Can mimicry be a form of abuse?

This decision will be important in determining how courts are interpreting the right of publicity in the age of social media and sharing of digital content on a worldwide platform. Furthermore, the court’s decision regarding potential copyright infringement claims will be important for individuals seeking to parody and satire other original works.

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