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The Internet of Things (“IoT”) is the next evolution and is making a remarkable impact on technology and our way of life. In fact, the availability of an omnipresent network connectivity has fostered the widespread use of smart devices.

Devices are now able to communicate with each other through embedded sensors that are linked by wired and wireless networks. For example, they include thermostats, automobiles, or pills that permit a physician to monitor the patient’s health.

Technology has allowed us to detect and monitor changes in the physical status of connected devices (e.g., RFID, sensors) in real-time. Technology advancements allow networks and objects they connect to become more intelligent. The factors that are currently driving growth, include, development of smart cities, smart cars, and smart homes, enhanced connectivity infrastructures, and a connected cultures.

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Electronic discovery (a/k/a “eDiscovery”) is the process of identifying, locating, preserving, collecting, preparing, reviewing, and producing electronically stored information in the context of the legal process. Electronically stored information (“ESI”) includes anything that can be stored in electronic form on a computer or other media device. A computer is defined as “an electronic, magnetic, optical, electrochemical, or other high speed data processing device performing logical, arithmetic, or storage functions (e.g., desktop, laptop, smart phones, tablets, CDs, DVDs, flash drives, backup tapes, voice mail, servers, and access control systems).

What Are the Issues That Arise During Electronic Discovery?

The following issues may arise during the course of electronic discovery:  First, the attorney-client privilege and work-product doctrine play a key role.  The attorney-client privilege protects the confidentiality of communications between an attorney and his/her client.  The work-product doctrine prevents a party from discovering documents that are prepared in anticipation of litigation.

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In these days, many people spend time on their electronic devices to become members of internet dating services. Many companies are now providing online dating services to their members. In general, the online dating services require their members to submit a profile, which may include personal information (e.g., name, email address, date-of-birth, and photos). As a result, the internet dating service may be sued by its members or third parties for various legal claims.

What Are the Typical Legal Claims Against Internet Dating Services?

In recent years, the internet dating services have been targets of lawsuits.  In some cases, the internet dating service may facilitate sexual encounters between its members, which can lead to its member being arrested for having sex with a minor.  In other cases, the members defame, harass, stalk, or bully each other.  In these cases, the courts have enforced or dismissed the civil claims against the internet dating service for various reasons.  The typical claims against the internet dating service may be for breach of contract, negligence, deceptive trade practice, Lanham Act violation, failure to warn, invasion of privacy, defamation, or fraud.  It is important to note that each of the aforesaid claims requires specific elements and supporting evidence to pass muster in court.  See The Perils and Pitfalls of Online Dating for more information.

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Online banking is an electronic payment system that enables customers of a financial institution to conduct financial transactions on the web.   In today’s high-tech world, online banking fraud is committed on a daily basis.  As such, sometimes customers may not be liable for certain unauthorized online transactions, subject to the terms and conditions of the bank’s service agreement.  Online banking fraud is to defraud a financial institution or obtain money or other property under the custody of a financial institution by false pretenses.  A related issue includes financial identity theft.   So, financial institutions use encryption technology (e.g., secure socket layer – a/k/a “SSL”) to prevent unauthorized access to data.

In general, the customer must notify bank within 60 days after receiving a periodic statement pursuant to 15 U.SC. § 1693f.  Under 15 U.S.C. § 1693g(b), the burden of proof of consumer liability is on the bank.  So, in order to establish a customer’s liability, the bank must prove the transfer was authorized.  In case of a violation, the bank may be subject to civil liability under 15 U.S.C. § 1693m.

What Are the Common Methods Used to Defraud Customers?

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Pay-per-click (“PPC”) advertising is a profitable online service that search engines, such as Google, Yahoo, or Microsoft, provide their customers. Now recently, PPC fraud has developed and caused loss of revenues for businesses and advertisers.   PPC fraud occurs when someone or a program clicks on a company’s advertisement without intending to view the website or buy anything.

Many companies have filed lawsuits against search engines, claiming that they have breached the terms and conditions of their contracts. These companies have alleged that the search engines, acting as the intermediaries, that published their online advertisements improperly charged them for fraudulent clicks. Two questions can be raised by these implications. First, how should a chargeable click be defined within the advertising contract? Second, does a search engine have any duty to protect advertisers from fraudulent clicks?

What is PPC Advertising?

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In recent years, global positioning system (“GPS”) technology has increased in usage on various GPS-enabled devices (e.g., cars, smartcards, handheld computers, and cell phones).  This technology brings value to its users, however, it has caused a significant decrease in privacy. Private and public organizations are able to collect and use the information for different purposes. For example, private organizations may collect data for marketing. Naturally, there are proponents who argue for governmental or non-governmental collection and use of information for different reasons (e.g., national security, emergencies). There are also proponents who argue that the collection and use of information leads to abuse (e.g., unauthorized access, invasion of privacy). Therefore, we need clear and uniform legal standards to control when anyone can collect and use information about an individual.

At this time, there is no law that restricts the government’s collection or use of GPS tracking information against individuals. However, some states have enacted legislation that restricts the commercial use of GPS. The Fourth Amendment limits the use of GPS technology, but its protection from unreasonable search and seizure is less effective due to recent technology advancements.

The main issue is privacy.  In today’s highly-technological world, most individuals carry their cell phones all the time. So, wireless network providers (a/k/a cell phone carriers) are able to track the individual’s movements. On a side note, GPS technology has been used to save lives in emergencies. The Federal Communications Commission (“FCC”) mandates wireless network providers to submit the cell phone location for emergency 911 calls (“E911”) that have been made from cell phones. The law on this issue is relatively clear. It permits cell phone carriers to provide information to third parties (e.g., FBI, NSA, or Police) for E911 emergency calls only. However, they need the cell phone owner’s consent in any other situation.

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In recent times, e-residencies (a/k/a “electronic residency”) have become a trend in some European societies. For example, the Republic of Estonia implemented this concept into its banking systems in order to permit people to manage their funds in an electronic environment. According to the Information System Authority, in 2001, the first nation-wide ID-card was introduced as the primary identity document for Estonian citizens both in the real and digital world. It is possible to attach a digital signature to the ID-card that constitutes a handwritten signature.

The Republic of Estonia is operating on the cutting-edge of technology. It has created an electronic state (“e-State”) where almost all transactions are completed by using technology. For example, Estonians developed Skype. The government permits its citizens to start a business online, pay taxes online, administer schools online, and pay their car park fees by mobile phone. It seems that their logistics transcend most societies. However, their achievements have not been without problems. In 2007, a cyberattack took place against its government’s websites and data communication networks.

What are the legal ramifications?

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In general, the interested parties in litigation engage in some sort of “alternative dispute resolution,” or ADR, in order to resolve disputes. In fact, ADR may be used to settle cases that are still pending in court. Both the judicial and legislative branches of government have established new programs in order to promote judicial economy. There are both general and specific applications of the alternative dispute resolution. For example, the United States District Court for the Central District of California offers three options. First, a settlement conference with the district judge or magistrate who is assigned to the case. Second, a mediation with a neutral selected from the Court Mediation Panel. Third, a private mediation.

The courts can use various sanctions to urge the interested parties to engage in ADR. For example, sanctions may include imposing court costs, awarding legal fees, contempt, denial of trial de novo (amounting to confirmation of an arbitrator’s award), and dismissal of the pending litigation. However, they can only use these methods in limited circumstances and pursuant to applicable guidelines.

The trial courts have been allowed to use sanctions to force participation in alternative dispute resolution (e.g., arbitration or mediation). The sanctions that were used, included, contempt, denial of trial de novo, striking of pleadings, and dismissal. Yet, sanctions for failure to attend mediation cannot be imposed without notice and hearing. For example, in Rizk v Millard, 810 S.W. 2d 318 (Tex. App. Houston, 14th Dist., 1991), the Court of Appeals held that a trial court judge’s order striking the pleadings of a defendant, after a hearing in which it was determined that defendant violated a compromise agreement, when there was no pending motion to strike, no notice to defendant, and no hearing, violated due process. Although, it is rare, but in some case, the court may consider the argument that opposing counsel should be sanctioned for the failure to attend mediation or arbitration.  The dismissal of a case is rare as the court has the option to impose additional costs and attorney’s fees on the recalcitrant party or his/her attorney for their failure to participate in such proceedings.

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In recent years, much of consumer retail consumption has transitioned to the online marketplace. So, many of us engage in e-commerce, especially when shopping for the upcoming holiday season. While e-commerce is convenient and easy, consumers are becoming more aware of the risks posed by hackers that commit online fraud. Merchants who administer websites for online shopping must take measures to assure that their sites are protected from online hackers and fraud. Online merchants may be held liable for online fraud if the proper steps are not taken to prevent it. Are you an online merchant? Are you worried about protecting the sensitive information of your customers? If so, then you must take certain steps to prevent fraud and unauthorized access (i.e., hacking).

How Does Online Fraud Occur?

Online fraud is fraud that is committed using the Internet. This type of fraud typically comes in two forms: (i) financial fraud; and (ii) identity theft. Financial fraud often occurs when a hacker collects a consumer’s financial information to steal money.  Identity theft usually occurs when a hacker collects a consumer’s information, and then uses it to open bank, mortgage, or credit card accounts. Many times the two types of fraud happen concurrently. Hackers often target e-commerce websites because consumers are constantly offering their credit card and personal information through these websites. Online merchants must take precautions to prevent hacking that leads to this kind of fraud.

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The best advertising directs a company’s message directly to the customer.  Direct telephone marketing is an effective way to accomplish this kind of advertising.  However, the Telephone Consumer Protect Act (“TCPA”) now restricts how businesses can engage in direct telephone marketing.  But, there are many other ways companies can directly reach consumers—i.e., text messages, emails, and instant messages. These kinds of communications may not violate the law against direct telephone marketing.  Is your company looking for more effective marketing? Are you unsure how you can advertise directly to customers’ devices?  If so, then recent interpretations of the TCPA may allow your business to advertise directly to customer devices.

What Is the TCPA?

The TCPA was enacted in 1991 to restrict telemarketing and the use of automated telephone calls for the purpose of marketing. The law makes it unlawful “to make any call using any automatic telephone dialing system (“ATDS”) . . . to any service for which the party is charged for the call.” An ATDS means equipment, which has the capacity to store or produce telephone numbers to be called, using a random or sequential number generator, and to dial such numbers.  A recent case has helped limit the definition of an ATDS.  In Marks v. Crunch San Diego, LLC, a district court in California held that text message marketing may not be an ATDS, and therefore is in compliance with the TCPA.

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