Privacy and Data Security
On December 6, 2023, Federal Communications Commission Chairwoman Jessica Rosenworcel announced a new initiative to strengthen and formalize the cooperation between the FCC and its state partners on privacy, data protection and cybersecurity enforcement matters.
As part of the work of the FCC’s Privacy and Data Protection Task Force, the FCC’s Enforcement Bureau has signed Memoranda of Understanding with Attorneys General of Connecticut, Illinois, New York and Pennsylvania to share expertise, resources and coordinated efforts in conducting privacy, data protection and cybersecurity-related investigations to protect consumers.
The Memoranda of Understanding
The new MOU affirm that the FCC and State Attorneys General “share close and common legal interests in working cooperatively to investigate and, where appropriate, prosecute or otherwise take enforcement action in relation to privacy, data protection or cybersecurity issues” under sections 201 and 222 of the Communications Act.
Coordinated action and information sharing will take place under all applicable federal and state laws, and privacy protections.
Federal and State Comments
FCC Chairwoman Rosenworcel said, in pertinent part, that “[d]efending consumer privacy is an all-of-government responsibility and a shared challenge. Today we take on evolving consumer threats with new formal partnerships with state law enforcement leaders, which have already been successful in obtaining record-breaking results in combatting illegal robocalls.”
FCC Enforcement Bureau Chief Loyann A. Egal said, in pertinent part, that “[u]se of information and communications technology and services have significantly enhanced our lives while at the same time increasing vulnerabilities to our privacy and sensitive data.
On December 13, 2023, the Federal Communications Commission adopted new rules designed to protect consumers from “scam communications” by directly addressing some of the “biggest vulnerabilities” in America’s robotext defenses and closing the “lead generator” robocall/robotexts loophole.
The new rules allow blocking of “red flagged” robotexting numbers, codifies Do-Not-Call rules for texting, and encourages an opt-in approach for delivering email-to-text messages.
Closing the Lead Generator Loophole
The new rules close a loophole through which “unscrupulous robocallers and robotexters inundate consumers with unwanted and illegal robocalls and robotexts.” The new rules make it unequivocally clear that comparison shopping websites and lead generators must obtain consumer consent to receive robocalls and robotexts one seller at a time – rather than have a single consent apply to multiple telemarketers at once.
Combating Robotext Sources
The new rules allow the FCC to “red flag” certain numbers, requiring mobile carriers to block texts from those numbers. The rules also codify that Do-Not-Call list protections apply to text messaging, making it illegal for marketing texts to be sent to numbers on the registry. And the order encourages providers to make email-to-text messages an opt-in service, which would limit the effectiveness of a major source of unwanted and illegal text messages.
Groundwork for Future Steps
In addition to the rules, the FCC also proposed and will take public comment on additional steps it might take against robotexts. The FCC proposes additional blocking requirements when the FCC notifies a provider of a likely “scam text-generating number.” The FCC will also seek further comment on text message authentication – modeled on the implementation of STIR/SHAKEN protocols for phone calls – including on the status of any industry standards in development.
On October 10, 2023, California Governor Gavin Newsom signed the Delete Act (SB 362). The Act is new legislation that requires businesses that meet the definition of “data broker” to provide detailed disclosures about its practices, register with the state and delete any personal information relating to a California resident upon receiving a verifiable deletion request.
The Act requires the California Privacy Protection Agency to establish a simple deletion mechanism that permits individuals to submit deletion requests that data brokers must adhere to starting August 1, 2026. Importantly, beginning in 2028 data brokers will be subject to audits intended to demonstrate compliance with the Act.
What Businesses are Covered Under the Act?
The Delete Act defines “data broker” as a business that knowingly collects and sells personal information of a consumer that it does not have a direct relationship with, to third parties. Excluded are certain entities that may be covered by various federal and state laws relating to data, such as the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, the Health Insurance Portability and Accountability Act, the Confidentiality of Medical Information Act and the California Insurance Information and Privacy Protection Act.
Data brokers must register with the CPPA and pay registration fees, as well as fees for access to the deletion mechanism.
What are the Applicable Registration and Disclosure Requirements?
Data brokers are required to register with the CPPA on or before January 31 for each year that they meet the statutory definition of “data broker.” In fact,
On September 21, 2023, the Federal Trade Commission announced that it has joined the Federal Communications Commission in signing a renewed memorandum of understanding (MOU) between public authorities who are members of the Unsolicited Communications Enforcement Network (UCENet). The MOU aims to promote cross-border collaboration to combat unsolicited communications, including email and text spam, scams, and illegal telemarketing.
“The FTC is committed to using all of its tools to fight robocalls and other unsolicited communications that try to prey on consumers,” said FTC attorney and Chair Lina M. Khan. “This scourge does not respect borders, and our recommitment to this MOU underscores the importance of international communication and cooperation to combat this problem.”
UCENet members agreed to renew and make evergreen the MOU, a non-binding instrument which the FTC and its partners signed in 2016.
The 2016 MOU was aimed at facilitating information sharing, capacity building, and enforcement assistance among the partners. For the past seven years, it also has facilitated communication about emerging threats and complaint trends related to spam, scams, and illegal telemarketing.
The UCENET MOU is part of the FTC’s continuing to work to fight harms that can arise from unwanted messages. According to the announcement, unsolicited communications in the form of illegal and spoofed robocalls, text messages, and emails are often the source of scams that harm millions of consumers in the United States each year. The revised MOU also has been signed by UCENet partners in Canada,
FTC advertising compliance and defense attorney Richard B. Newman was recently quoted in an article for Cybersecurity Law Report titled “Xbox and Alexa COPPA Case Lessons: Avatars, Biometrics and Other New Expectations.”
The article discusses the FTC’s recent privacy enforcement run and how it reinforces regulators’ expanding expectations for companies using video and audio recordings, smart devices and AI. The article further discusses recent agency settlements with Microsoft, Amazon and educational technology provider Edmodo that drew $51 million in penalties, broke new ground on the Children’s Online Privacy Protection Act Rule enforcement and signaled new expectations for all companies’ privacy compliance.
In discussing how COPPA is a tool for financial penalties and how these cases highlight the value of COPPA enforcement to the FTC versus its Section 5 authority under the FTC Act, Mr. Newman noted that “[i]n Amazon, obviously, the $25‑million settlement amount leaps out” for Alexa’s improper retention of voice recordings in violation of COPPA.
Mr. Newman further shared that “not just the FTC, but state attorneys general are becoming increasingly interested in expanding regulation of the use and sharing of consumer data, including geolocation data.”
While the FTC contests the issue at the federal level, data brokers and those that interact with them should expect that the plaintiffs’ class action bar and state AGs may lodge claims under state “little FTC acts” that echo the FTC’s July 2022 statement about geolocation data or the biometric one,
Florida has become the latest state – approximately ten – to enact a comprehensive privacy law. On June 6, 2023, Governor DeSantis recently signed SB 262 which includes some new privacy provisions. Florida also recently passed a child privacy law that is notably similar to California’s Age Appropriation Act that becomes effective July 1, 2024.
The Florida Digital Bill of Rights Law
Covered entities (“controllers”) include those that earn $1 billion in global gross annual revenues and either (i) receive 50% of gross annual revenue from online ad sales; (ii) operate a consumer smart speaker and voice command service with an integrated virtual assistant through a cloud-connected service and hands-free verbal activation; or (iii) operate an app store or digital distribution platform that has at least 250,000 apps available for download.
Note, however, that non-covered entities that serve as data processors for covered entities may potentially be impacted. More specifically, such processors are required to support a covered entities’ compliance efforts and to maintain responsible contracts that include provisions governing data processing. In fact, the new law sets forth specific requirements that must be included in such data processing agreements.
Not unlike other states, the Florida Digital Bill of Rights Law has numerous exemptions and applies to consumer information. Exemptions include entities covered by HIPAA (and business associates), financial institutions and affiliates (subject to GLBA), non-profits, certain government entities, and higher education institutions. There are also specific data exemptions.
On May 23, 2023, the Federal Trade Commission hosted a national workshop designed to consider the current state of recycling practices and recycling-related advertising.
This follows an FTC announcement in December 2022 that the agency was seeking public comment on potential updates and changes to its ‘Green Guides’ for the use of environment marketing claims. The Green Guides help marketers avoid making environmental marketing claims that are unfair or deceptive under Section 5 of the FTC Act.
Updates to ‘Green Guides’
In December 2022, the FTC announced that it would seek public comment on potential updates to its “Green Guides” for the use of environmental marketing claims. FTC attorneys seek to update the Green Guides based on increasing consumer interest in buying environmentally friendly products. The comment period was extended through April 24, 2023.
“Consumers are increasingly conscious of how the products they buy affect the environment, and depend on marketers’ environmental claims to be truthful,” said FTC lawyer and Bureau of Consumer Protection Director Samuel Levine. “We look forward to this review process, and will make any updates necessary to ensure the Green Guides provide current, accurate information about consumer perception of environmental benefit claims. This will both help marketers make truthful claims and consumers find the products they seek.”
The Green Guides were first issued in 1992 and were revised in 1996, 1998, and 2012. They provide guidance on environmental marketing claims, including how consumers are likely to interpret particular claims and how marketers can substantiate these environmental claims to avoid deceiving consumers.
The Florida Telephone Solicitation Act (“FTSA”) has long been criticized for numerous reasons, including an overly broad and vague autodialer definition. Florida’s Governor recently signed HB 761, which makes significant, telemarketer friendly changes, to the FTSA (Fla. Stat. § 501.059).
Fewer Types of Telemarketing Equipment Covered
The amendments narrow the types of telemarketing equipment covered by the statute.
For example, prior the the amendments, autodialing restrictions applied to “automated system[s] for the selection or dialing of telephone numbers.” Now, the amended autodialing restrictions apply only to “automated system[s] for the selection and dialing of telephone numbers.” The foregoing effectively eliminates the legal argument that a dialing or texting platform falls under the statute even if the calling party manually selects or dials a telephone number to be called or texted.
Caveat, the amended version of the statutes continues to restrict “the playing of a recorded message when a connection is completed to a number called, or the transmission of a prerecorded voicemail.”
Text Message Notice and Cure Period
The revised statute provides for a fifteen (15) day notice and cure period before a plaintiff is permitted to initiate formal legal action. For example, by responding “STOP” to message.
Expanded Definition of “Signature”
The modified statute has a broadened definition of “signature” and includes “checking a box” and “responding affirmatively to receiving text messages.” Digital signatures may be acceptable to obtain prior express written consent provided that “such form of signature is recognized as a valid signature under applicable federal law or state contract law.”
Retroactive Application
Florida Telephone Solicitation Act class action cases that are not certified prior to the effective date of the statutory amendments are subject to the retroactive application of the new legislation.
FTC issues policy statement addressing emerging technologies that might harm consumers and violate the FTC Act.
On May 18, 2023, the Federal Trade Commission issued a warning that the increasing use of consumers’ biometric information and related technologies, including those powered by machine learning, raises significant consumer privacy and data security concerns and the potential for bias and discrimination.
Biometric information refers to data that depict or describe physical, biological, or behavioral traits, characteristics, or measurements of or relating to an identified or identifiable person’s body.
“In recent years, biometric surveillance has grown more sophisticated and pervasive, posing new threats to privacy and civil rights,” said FTC lawyer Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Today’s policy statement makes clear that companies must comply with the law regardless of the technology they are using.”
In a policy statement, the Commission said the agency is committed to combatting unfair or deceptive acts and practices related to the collection and use of consumers’ biometric information and the marketing and use of biometric information technologies.
Recent years have seen a proliferation of biometric information technologies. For instance, facial, iris, or fingerprint recognition technologies collect and process biometric information to identify individuals. Other biometric information technologies use or claim to use biometric information in order to determine characteristics of individuals, ranging from the individuals’ age, gender, or race to the individuals’ personality traits, aptitudes, or demeanor.
As previously blogged about here, the FCC recently proposed a rule that would turn the lead generation on its head. The proposed new rule goes quite a bit further than simply requiring wireless carriers to block texts from illegitimate numbers.
In addition to carrier investigation and blocking obligations, as well as an extension of DNC protections to text messages, the FCC proposes:
“…to ban the practice of obtaining a single consumer consent as grounds for delivering calls and text messages from multiple marketers on subjects beyond the scope of the original consent.”
In an illustration of the issue, Company A describes a website that purports to enable consumers to comparison shop for insurance. The website sought consumer consent for calls and texts from insurance companies and other various entities, including Company A’s ‘partner companies.’ The ‘partner companies’ were listed in a hyperlink on the web page (i.e., they were not displayed on the website without clicking on the link) and the list of ‘partner companies’ included both insurance companies and other entities that did not appear to be related to insurance.”
Public Knowledge, an influential non-profit Washington, D.C.-based public interest group argues that lead generators and data brokers use hyperlinked lists to harvest consumer telephone numbers and consent agreements on a website and pass that information to telemarketers and scam callers. Commentors have argued that the telemarketer that obtains the consumer’s contact information from the lead generator may believe that it has the consumer’s prior express consent,
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About This Blog and Hinch Newman’s Advertising + Marketing Practice
Hinch Newman LLP’s advertising and marketing practice includes successfully resolving some of the highest-profile Federal Trade Commission (FTC) and state attorneys general digital advertising and telemarketing investigations and enforcement actions. The firm possesses superior knowledge and deep legal experience in the areas of advertising, marketing, lead generation, promotions, e-commerce, privacy and intellectual property law. Through these advertising and marketing law updates, Hinch Newman provides commentary, news and analysis on issues and trends concerning developments of interest to digital marketers, including FTC and state attorneys general advertising compliance, civil investigative demands (CIDs), and administrative/judicial process. This blog is sponsored by Hinch Newman LLP.