Mobile Money, Mobile Risk – The Future of ePayment Systems

Earlier this week, the editorial staff of the UK-based publication e-Finance & Payments Law & Policy, interviewed Joseph I. Rosenbaum, New York-based partner and Chair of Rimon’s global Advertising Technology & Media law practice, in connection with its cover story for the January 2013 issue. The stimulus for the initial story was the release late last year of a report by the U.S. Federal Deposit Insurance Company (FDIC) regarding the risks attendant to the growth and evolution of the mobile payment industry, and the use of mobile contactless payment technology by consumers and merchants in routine purchase transactions (e.g., NFC, Bluetooth, RFID, SMS, Wi-Fi, and WAP enabled devices generally.)

While the cover story is still in the process of being edited for publication, the editorial staff felt that publishing the full interview separately was itself newsworthy. So follow this link and you can read the full text of the e-Finance & Payments Law & Policy interview with Joseph I. Rosenbaum, partner at Rimon LLP.

You can also read the FDIC report, issued in its Supervisory Insights – Winter 2012 release, right here: Mobile Payments: An Evolving Landscape.

Of course, if you need help or more information, contact Joseph I. Rosenbaum (joseph.rosenbaum@rimonlaw.com), who also leads the ATM Mobile Marketing initiative, or feel free to call upon any of the Rimon lawyers with whom you regularly work. We are happy to help.

New Jersey Casinos Permitted to Offer Mobile Gambling on Premises

In a press release dated October 9, 2012, the New Jersey Office of the Attorney General, Division of Gaming Enforcement, unveiled new temporary regulations applicable to mobile gaming in Atlantic City casinos. Procedurally, these regulations will remain in effect as of October 8 for 270 days, while the Division of Gaming Enforcement hopes to publish final regulations within 60 days.

With a focus on preventing underage gambling and protecting the security of mobile gaming, these new regulations will permit established and licensed casinos to enable mobile gambling on their property – ostensibly in every “recreational” area, but not in parking lots and garages. The regulations require providers of software and other technical means to exploit mobile gambling, to also obtain licenses as gaming-related service providers.

If you want to review the press release and materials, you can go to the New Jersey Office of the Attorney General website, or you can download and read a copy of the new temporary regulations right here N.J.A.C. 13:69O [PDF].

Of course, if you need help or more information, contact me, Joseph I. Rosenbaum (joseph.rosenbaum@rimonlaw.com), or any of the Rimon lawyers with whom you regularly work.

CFPB Proposes Nonbank Risk Supervision

This post was written by Robert M. Jaworski and Joseph I. Rosenbaum.

The Dodd-Frank Act granted to the newly created Consumer Financial Protection Bureau (“CFPB”) supervisory authority over a wide array of financial entities, including large depository institutions and their affiliates, as well as various nonbank “covered persons,” such as residential mortgage originators and servicers, private education lenders, payday lenders, and “larger participants” in other markets and their respective service providers. To prevent “bad actors” from escaping through cracks in the CFPB’s supervisory reach, Dodd-Frank gave the CFPB broad authority to supervise other nonbank covered persons if CFPB has “reasonable cause to determine, by order … and after a reasonable opportunity to respond” that such nonbank covered person “… is engaging, or has engaged, in conduct that poses risks to consumers with regard to the offering or provision of consumer financial products or services” (“Additional Authority”). The CFPB has now taken its first step toward fleshing out this Additional Authority and providing a framework for this type of supervisory authority.

On May 20, 2012, the CFPB suggested rule was published in the Federal Register, proposing to establish procedures by which it will supervise any nonbank covered person that is not already subject to CFPB supervision. The most significant of these procedures would:

  • Require the CFPB to provide such unsupervised person with a Notice of Reasonable Cause, informing them that the CFPB believes it has a reasonable basis upon which to assert supervisory authority and providing facts that support that belief
  • Give the unsupervised person an opportunity to respond to the Notice, in writing within 20 days, either contesting the assertions or voluntarily consenting to supervision
  • Allow an unsupervised person to contest the assertion of such supervisory authority, in writing, but also through informal arguments in a supplemental oral response (typically by telephone), which would not constitute a hearing on the record, and neither discovery nor testimony of witnesses would be permitted. Following any contest and submissions, the Assistant Director for Nonbank Supervision would be required to make a recommendation, with the Director authorized to issue the final decision and Order as to whether or not the unsupervised person shall be subject to CFPB supervision.
  • Allow the unsupervised person, once becoming subject to CFPB supervision, to petition the Director after two years (and no more than annually thereafter) for termination of the Order. FYI, an unsupervised person that voluntarily consents to CFPB supervision would not have a right to file such a petition.

Issuance of a Notice does not mean charges have been filed against the unsupervised person, it simply triggers the procedures outlined in the CFPB rules. However, if the CFPB issues a notice of charges, it can choose, in its sole discretion, to utilize more formal adjudicatory procedures (including some variations) that are described in 12 C.F.R. 1081.200. Comments on the proposed rules are due by July 24, 2012, and you can read the entire proposed CFPB rule directly at Procedural Rules To Establish Supervisory Authority Over Certain Nonbank Covered Persons Based on Risk Determination.

If you need more information about these proposed rules, or want help determining if you should submit comments and the best way to approach the substance and form of those comments, please contact Robert M. Jaworski (rjaworski@rimonlaw.com). Of course, you can always find out more or get the assistance you need by contacting me, Joe Rosenbaum, or the Rimon attorney with whom you regularly work.

IAPP Privacy Presentation – Is the Wizard of Oz Still Behind the Curtain?

On May 10, 2012, I had the privilege of making a presentation at the IAPP Canada Privacy Symposium 2012. The title of my presentation was "Social and Mobile and Clouds, Oh My!" and it addressed some of the emerging issues in privacy, data protection and surveillance that arise as a result of globalizing technology and the convergence of social media, mobile marketing and cloud computing.

As part of that presentation (and as I have started to do for some time now in other presentations), I raised the issue of how lawyers, the law, legislators and regulators often use words to describe activities – words rooted in tradition or precedent – that are no longer applicable to the activity in today’s world. "Privacy" is such a word, although "not applicable" perhaps is too harsh. Obviously the word has significant applicability in a wide variety of situations. But "invasion of privacy" has become a knee-jerk reaction to virtually every information-gathering activity, even information readily and publicly available and, in some cases, posted, disclosed or distributed by the very individual whose privacy is alleged to have been "invaded."

Please feel free to download a PDF of my presentation, "Social and Mobile and Clouds, Oh My!" [PDF] (Note: Embedded video file sizes are too large to include), and let’s start a conversation about how we use words and how they wind up in laws and regulations. Lawyers work with words. Use them artfully and they provide powerful structures within which society, commerce and all forms of human endeavor function. Use them improperly and they cause confusion, uncertainty, inconsistency and inherently inequitable outcomes.

Seems like I am not the only one to point this out. Take a look at the insightful comments by John Montgomery, COO of GroupM Interaction, North America, as reported in a MediaPost RAW posting on Social Media entitled: If Marketing Terms Could Kill.

Kudos John. I’m with you. Let’s get it right.

FYI, Rimon has teams of lawyers who have experience and follow developments in privacy and data protection, information security and identity theft. If you want to know more, if you need counsel or need help navigating, or if you require legal representation in this or any other area, feel free to call me, Joseph I. ("Joe") Rosenbaum, or any of the Rimon lawyers with whom you regularly work.

White House Releases Privacy Report and Calls For a Consumer Bill of Rights

Earlier today, Secretary of Commerce John Bryson and Federal Trade Commission Chairman John Liebowitz outlined the Obama administration’s strategy for ensuring “consumers’ trust in the technologies and companies that drive the digital economy.” On the heels of their announcement, and although it is dated January 2012, the Department of Commerce released a long-awaited report entitled “Consumer Data Privacy in a Networked World, A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy,” the administration’s roadmap for privacy legislation and regulation in the years ahead.

The announcement and privacy blueprint envisions a comprehensive and integrated framework for data protection, rather than the current sector-patchwork-quilt approach, and is comprised of four key pillars: (1) a consumer privacy bill of rights; (2) a multi-stakeholder process and approach dealing with how such a bill of rights would apply in a business context; (3) more effective enforcement; and (4) greater commitment to harmonization and cooperation in the international community.

The Report outlines the seven principles of its proposed Consumer Privacy Bill of Rights and, although calling for legislation and regulation to codify and memorialize these rights, also sets out consumer privacy standards that companies are asked to immediately and voluntarily adopt in a cooperative public-private partnership. These seven principles are:

  1. Individual Control Through Choice
  2. Greater Transparency
  3. Respect for Context
  4. Secure Handling
  5. Access & Correction Rights
  6. Focused Collection
  7. Accountability

The Report notes that a company’s adherence to the voluntary codes will be viewed favorably by the FTC in any investigation or enforcement action for unfair and deceptive trade practices. By implication, a company that does not adopt and follow these principles might be used as evidence of a violation of Section 5 of the FTC Act, even if federal legislation is not passed on the subject. The FTC is expected to soon release its Final Staff Report on Consumer Privacy that will be consistent with the Obama administration’s proposed Framework Report. The report reinforces the administration’s commitment to international harmonization, and also touches upon the role state attorneys general in the United States can play. While we are still reviewing the details – and more will likely be forthcoming from the administration in the weeks and months ahead – Legal Bytes will keep you on top of these developments as they arise.

You can read the entire report right here: Consumer Data Privacy in a Networked World, A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy.

These are developments that affect all businesses, domestic and multi-national, global and local, consumers and regulators. The complexity and challenges of compliance should not be underestimated, nor should the administration’s commitment to follow the roadmap outlined. Rimon has teams of lawyers who have experience and follow developments in privacy and data protection, from prevention and policy to compliance and implementation. If you want to know more, need counsel, need help navigating, or if you require legal representation in this or any other area, feel free to call me, Joseph I. (“Joe”) Rosenbaum, or any of the Rimon lawyers with whom you regularly work.

Online Gambling. Time to Change Legal Bytes to Legal Bets?

On December 23, 2011 the U.S. Department of Justice reversed its decade long position on the applicability of the U.S. Wire Act to online gambling that does not involve sports betting. In previous years, prosecutions were brought against any form of online gambling based on their interpretation of the Wire Act. This opinion, reverses the long standing position and may well clear the way for States to become more aggressive in legislatively enabling intra-State online gaming and who knows, perhaps the Federal government will consider licensing and regulation permitted online gambling. This is not simply big news within the United States. Gaming and gambling operators around the world who may already be working with governments on their lottery initiatives and many other companies who have no presence in the United States may now be looking to establish a foothold and ultimately a major presence in the U.S. Similarly, U.S. casino and gaming operators already licensed, may sense the opportunity for foreign investment and the injection of new capital, new expertise and a more global platform.

Rimon and its interdisciplinary team of experienced gaming transactional, e-Commerce, payment, privacy, technology and marketing lawyers have their eye on this new development that has the potential to energize the data-intensive, multi-billion dollar online gambling industry in the U.S. market. Joe Rosenbaum, Ramsey Hanna and Joshua Marker have authored a Client Alert which you can read here:  U.S. Federal Government Reverses its Stance on Online Gaming.

Advertising Internet Speeds: Can You Handle the Truth?

In The Wall Street Journal online, Carl Bialik, The Numbers Guy writer and blogger, analyzes the numbers behind advertised versus actual broadband Internet download speeds, and government efforts to measure what the consumer receives compared with what is promised by the ISPs.

In his posting entitled, "How Speedy Are High-Speed Internet Lines?", Mr. Bialik examines the issue of whether statistics derived from a report commissioned by the Federal Communications Commission (www.fcc.gov) are used in a way that is meaningful to consumers when evaluating the offerings of Internet service providers.

Notably, Mr. Bialik’s article also compares the approach taken by the UK’s Office of Communications (Ofcom) in measuring the speeds offered on the other side of the pond, which maintains the panel of tested carriers in secret to prevent any "gaming" of the test process and system.

Joseph I. ("Joe") Rosenbaum is quoted in the posting in connection with some of the legal issues that arise when statistics and factual information contained in government or other reports are used in advertising. Truth (facts) may not, as in the case of defamation, be an absolute defense.

The government may feel that consumers can’t handle the truth. Or at least the truth, depending on the context and the manner in which it is used in advertising. When, for example, can statements that are literally true become false or misleading? As has been previously noted in Legal Bytes, using old facts can be deceptive and misleading when facts are outdated and new facts are available, or when the old facts clearly don’t apply.

In some cases, even current facts can be misleading. If I advertise that an article will be posted on Legal Bytes once a month and I post two, can I claim that Legal Bytes beats its own advertised promise to consumers by double? If you and I enter a race and I win, can you advertise that I came in next to last and you came in second? Is that true? Yes. Is it misleading? Yes. I’ve omitted facts that are material to the information quoted and that are material to the context for you to evaluate.
The truth, after all, is not always that simple and I am grateful for that. As in the words of William Jennings Bryan: "If it weren’t for lawyers, we wouldn’t need them."

Whatz Gnu

Many thanks to the International Law Office (ILO) for publishing a derivative of our Legal Bytes article. You can download and read a personal copy of the ILO posting FTC Targets Ads That Target Kids, or you can read the original Legal Bytes blog posting at "Mom, is it OK for them to follow me?" FTC Targets Ads That Target Kids.

Lawyer Advertising – Manipulate This!

When it comes to advertising, lawyers are bound not only by laws and regulations that apply to all advertisers, but also by the rules set by the professional licensing authorities in each state in the United States, as well as by many “Bar” Associations (Bar as in Barrister, not barista or your local tavern). These authorities and associations often set more stringent advertising standards and rules, based on ethical guidelines and professional standards.

Florida has some of the most stringent restrictions on attorney advertising in the United States. For example, Florida’s rules prohibited ads that were “manipulative” (whatever that means) or that included “background sound other than instrumental music” – presumably to prevent the sounds of ambulance sirens or jail cell doors slamming.

The restrictiveness of attorney advertising, including Florida’s tough rules, has been the subject of criticism, as noted in a previous Wall Street Journal article.

Yesterday, a federal judge in Jacksonville, Fla., ruled that these restrictions are vague and violate the First Amendment rights of lawyers, and must go! The judge’s ruling noted that, “The term ‘manipulative’ is so vague that it fails to adequately put members of the Bar on notice of what types of advertisements are prohibited” – declaring the standard void. The judge also overturned the prohibition on background sounds, noting that such a rule violates the free speech rights of attorneys. Here is the entire Harrell v. Florida Bar decision [PDF] if you are interested.

In honor of the occasion, one clever individual decided to create a “lawyer ad” parody, which, by the way, has sounds previously banned by the Florida regulations. Enjoy.

 

Advertising: Misleading? Deceptive? What Do Consumers Think?

I have to thank Carl Bialik, The Numbers Guy writer and blogger for The Wall Street Journal, for including a quote in his recent (September 23, 2011) column, Bag Battle Takes a Statistical Turn.

The column focuses on the use of statistics by competitors and analysts alike – in this case statistics that related to claims made by Chicobag about the environmental impact of reusable plastic bags that many retail stores use to bag items, from groceries to clothing, when you check out with your purchases. It seems that Chicobag made some claims – citing statistics – about its products. Mr. Bialik’s column notes that Hilex Poly and some other competitors challenged the claims being made by Chicobag, and were unable to come to grips with either the numbers or the claims; litigation ensued.

Although Mr. Bialik focuses on the way numbers are used and the difficulties inherent in accumulating and using statistics – often when the subject matter may actually be a moving target – the legal issue is similarly complex. More often than not, false, misleading, deceptive advertising claims challenge the explicit veracity of a claim and whether that claim can be substantiated or whether the “net impression” or implicit claims (e.g., pictures or activities) can mislead or potentially deceive consumers. This claim, brought as an action under the Lanham Act – seeking an injunction and damages for false advertising and unfair competition for both a violation of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and under a state statute (South Carolina Unfair Trade Practices Act, South Carolina Code Annotated § 39-5-10, et seq.) – really revolves around whether the veracity or inaccuracy of claims (even if they can be substantiated or derived from facts that were believed to be true when stated) makes any difference at all in the minds of consumers.

Without giving away The Numbers Guy’s secrets (or forgetting the Federal Trade Commission Act that prohibits “unfair or deceptive acts or practices in or affecting commerce”), the legal claim, in my view, hinged not on whether the statistics claimed by Chicobag were incorrect or even in some cases materially inaccurate, but whether the particular claims as made using those statistics, were material to a consumer. Whether a consumer was likely to make a different purchasing decision – or might at least be informed enough to consider doing so – based on the degree of inaccuracy.

So when you think of my blog Legal Bytes, I’ll close with a claim that everyone sees on those pizza cartons around the country – maybe the world: “You’ve tried the rest. Now try the best!” Can you say “puffery”?