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As mobile technology improves, we all do more on our mobile devices—e.g., banking, shopping, and gaming are just a few examples.  The Wall Street Journal estimates the mobile apps market as a $25 billion industry.  New businesses and entrepreneurs may want to jump into this growing market. When new developers enter the market they must consider the privacy rights of users.  The law protects consumers and their privacy from intrusion, and there are even stricter guidelines for apps used by children.  Are you interested in starting a mobile app business?  Are you ready to begin marketing your new mobile app?  If so, then there are steps you must take to ensure you are in compliance with the law and respecting the privacy rights of your customers.

What Is a Mobile Application?

A mobile application is software that can be downloaded and accessed using a mobile device, such as a smartphone or tablet. Apps can be paid or free.  Developers of free apps usually make a profit through advertisements, in-app purchases, and/or paid versions that offer more features than a free trial or “lite” version. Further, apps may collect data from the user.  Apps can access a user’s contacts, call logs, internet data, calendar, and device location.  Usually, this data is collected so that the app can perform what it is designed to do, such as make a bank transfer or direct the user to a destination through GPS.  Data collection must conform to consumer protection guidelines and developers will be held responsible to those guidelines.

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Today, most companies are dependent on technology and their computer systems, and there are entities whose primary focus is to hack into these systems. On the other hand, a company might experience an internal breach of its network system, which causes the unauthorized release of sensitive information. Any breach into or out of these systems could be catastrophic. The computer network for a company may contain important data, intellectual property, and consumer information. All industries are susceptible to a data breach. To help protect against these risks, companies must insure themselves with the correct policy. Traditional insurance policies may not be enough to cover all the risks. In recent years, insurance companies have begun to issue specific cybersecurity policies. What kinds of claims are covered under these cybersecurity insurance policies? How can an insurance company ensure that it is mitigating its own risks in underwriting a cyber policy? If you are concerned with these questions, then the effectiveness and scope of these cybersecurity policies is relevant to your company.

What Is Cybersecurity Insurance?

Cybersecurity insurance is an insurance policy that helps mitigate the risks posed by incidents such as “data breaches, business interruptions, and network damages.” The market for this kind of policy is still in development, and insurance companies and consumers are unsure how far reaching the policy protections are. Department of Homeland Security has stated that a more developed cybersecurity insurance market would lead to fewer successful cyber attacks—i.e., by implementing preventive measures in conjunction with policies and lowering premium prices based on the level self-protection. There are steps that companies and individuals can take to reduce their risk level to a cyber attack, and these steps may actually help prevent attacks. Preventive measures can at least lower the risk an insurance company must take in underwriting a cyber policy.

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In recent years, every aspect of our lives has become dominated by technology—and now people are beginning to wear their technology. For example, Google has released Google Glass, a wearable computer in the form of glasses. Samsung has released the Galaxy Gear smart watch, a device that one wears as a watch and functions as a phone. This new technology is creating a class of its own—“wearable technology” or “wearable computing.”  By utilizing this technology, a person can walk on the street wearing glasses or a watch while recording the images and sounds around him. Are you concerned with being recorded without notice? Do you want a person to be able to gather your personal information in an instant with facial recognition software? If these issues concern you, then wearable computing is relevant to your privacy rights.

What is Wearable Computing?

Wearable computing describes a class of computer-powered devices that can be worn by a user. There are many kinds of wearable computing devices, and some raise few concerns because they are as simple as a step counter or a heart rate monitor. Other devices can perform the same functions as a smartphone, but in a much more discrete manner. The more advanced wearable devices can take pictures, record video and sound, and respond to voice commands to read text messages, emails, and surf the web. Probably the most well-known and discussed technology, Google Glass, has been subject to criticism. If someone wears a Google Glass and looks at you, your first thought might be that you are being recorded or investigated.  In fact, some restaurants and bars in San Francisco have already banned this device because of their customers’ privacy concerns. Even with the concerns over privacy, this technology is likely to become even more pervasive.

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Computers are learning to do it all—even surf the Web. These computers, or programs, explore the World Wide Web, gathering information and processes for use in other forums. This technology, which is known as “web scraping” may also threaten website and consumer privacy concerns. Indeed, websites have a proprietary interest in their content and others are not authorized to access and reuse this information. Consumer information that is available online is not necessarily available for any use.  As such, web scraping has become a concern as regulators attempt to outline the parameters. Do you operate a website? Are you a consumer with personal information available over the Internet—such as your name, address, salary, or work history?  Do you have an interest in gathering information from various sites for your personal use? Do you wish to revise your terms of service in light of these advancements? If so, web scraping is relevant to your business and privacy concerns.

What Is Web Scraping?

Web scraping is the process of using computer software to extract information from websites. Usually, this type of software simulates web browsing that is performed by a human. This technique is used to automatically gather information from various websites. This is an effective tool in several fields such as online price comparisons. Often, the aggregate website will have agreements with other websites allowing web scraping to gather pricing data. Additionally, web developers often use this technique to copy website content and reuse it when designing a new site. However, this process can also be used in ways that press against privacy concerns. For example, web scraping can be used to gather a consumer’s personal information. This includes contact information, personal websites, and professional histories. Web scraping can also gather an online user’s comments on discussion boards. All such information is valuable to businesses that want to know how consumers feel about their products or services. Web scraping has increased drastically over the last few years. In 2013, web scraping made up 23% of all online browsing traffic.

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Companies, old and new, now have the opportunity to raise funds through a unique technique—crowdfunding. Although, this is a twist on the traditional investment model, crowdfunding allows companies and individuals to fund their new ideas and business ventures by seeking investments from the general public. This unconventional approach to the well-known investment structure allows new business to gain financial support. Do you have a new idea that you would like to fundraise? Are you a company that would like to launch a new product? Do you need financial support to help propel your latest venture? If so, then crowdfunding may help your entrepreneurial efforts.

What Is Crowdfunding?

Crowdfunding is the practice of fundraising a new company, idea, project, or venture through large numbers of people. These people typically donate small amounts that add up in the aggregate. Unlike the investment structure that appeals to traditional investors, the general public fundraises projects. Crowdfunding has begun to gain momentum and exposure after the passage of the Jumpstart Our Business Startups (“JOBS”) Act. This law was passed to help small businesses and entrepreneurs jumpstart their business. Both private and public companies may take advantage of this capital-raising model. Crowdfunding is unique because although it does allow for a company to use outside resources to fund a project, however, the company does not have to make an initial public offering, register as a public company, or meet the requirements of a traditional publicly-traded company. Also, unlike a public company, which receives outside investments on an on-going basis, crowdfunding efforts are limited in time. That is, they may not continue forever. An entity must raise its goal amount by a specified end date. Otherwise, the company must offer to return all investments made under that project.

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Where you visit online seems to say a lot about you. Online privacy has been in the spotlight recently, as consumers come to terms with the reality that their online tracks define who they are to marketers and government agencies.  By studying this data, third parties can paint a picture about consumers—i.e., where they go, what they do, their preferences, and even any illegal conduct.  Now, data brokers can also compile and study large bodies of data to find patterns in behavior. While this carries huge potential for technological advancement, it also comes with greater threats to consumer privacy.

What Is Data Mining?

Data mining is the intricate process whereby data brokers collect, store, and study large sets of data for patterns.  The data includes everything from shopping habits, healthcare records, online practices, and public records (e.g., court and property records). This data is then used in a variety of fields, including intelligence gathering, statistics, database systems, and machine learning. Usually, data mining is used to compile lists for targeted marketing purposes—such as lists of diabetics, smokers, and political affiliations. However, recent reports indicate that data mining has been used to compile more personal lists—rape victims, addicts, and AIDS victims. The U.S. government has used data mining in various surveillance projects. These projects were ultimately terminated because of rising concerns that they violate the Fourth Amendment protection against unreasonable searches and seizures. It is most shocking that the subjects never know they are victims to data mining. At a glance, most of these categories seem harmless. However, the underlying threat is that data brokers conduct mining projects without notifying consumers and without obtaining consent.

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In recent years, consumers have received numerous emails from merchants, all trying to sell a service or a product. While marketing and commercial activity is central to the American economy, the recipients of these emails must also enjoy their privacy. In an effort to protect against these disruptive emails, the California Legislature passed anti-spam laws in order to regulate commercial email activity. In addition, a recent district court opinion further clarified the types of emails that are implicated by these statutory standards.

What Are California’s Anti-Spam Laws?

In general, California’s anti-spam laws are codified under Business & Professions Code sections 17529 et seq. First, commercial email advertisements must come from a domain name registered to the sender. Commercial email advertisements include any email sent for the specific purpose of selling or advertising a product or service. The purpose of these laws is to limit promotional emails with false or misleading subject information. These laws apply to any U.S.-based company that sends emails to California consumers. It does not matter whether the sender is located in California. In fact, it may not even matter whether the sender knew the recipient was in California. Furthermore, California’s anti-spam laws provide a greater degree of protection than their federal equivalent—i.e., Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003 (“CAN-SPAM”). For example, CAN-SPAM requires that each email contain an “opt-out” option that allows consumers to quickly unsubscribe from future emails. The sender must comply with such a request within ten business days. In California, there are no such requirements. Indeed, the recipient can collect these emails and sue the sender for up to $1,000 per email.  So, the charges can quickly add up. If the sender of commercial emails is faced with a lawsuit, it bears the burden of proving that it was in compliance with both the state and federal standards.

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On July 11, 2014, the privacy watchdog, Electronic Privacy Information Center (“EPIC”) filed a formal complaint with the Federal Trade Commission (“FTC”) against Facebook. EPIC alleged that Facebook broke the law by secretly monitoring users’ emotions in response to news feeds. The complaint explains that Facebook deceived users through its psychological experiment because the users did not give prior consent to participate in the experiment and they were not aware that an experiment was taking place. EPIC stated that this could also be a violation of the guidelines for experiments involving humans. In a world where social media and online presence dominate interaction, such social experiments threaten to undermine privacy and expose the most personal information to marketing and commercial techniques.

What Was the Nature of Facebook’s Experiments?

Facebook conducted surveys to determine whether seeing positive or negative updates in news feeds impacted users’ emotions and altered their browsing tendencies. It controlled the newsfeed of nearly 700,000 members to study whether positive and negative news reports impacted online behavior. The findings from this study were reported in the Proceedings of the National Academy of Sciences. The issue underlying the EPIC complaint arose because Facebook did not warn users in their Data Use Policy that it would be using their data for research purposes. Other agencies have also threatened to take action against Facebook. The Center for Digital Democracy and regulators in the United Kingdom have stated an intent to file complaints. Indeed, the United Kingdom’s Information Commissioner’s Office intends to address its concerns with Facebook after it reviews the study and its findings. Facebook responded to these allegations by explaining that all users consent to this type of research when they sign up. Representatives did apologize to the public for the misunderstanding.

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The smartphone has brought a world of possibility to the average consumer’s fingertips. Now, this has come to include mobile banking. With fast-paced lifestyles and long lines at the banks, mobile banking has emerged as a thrilling convenience. However, this convenience brings cybersecurity concerns. Therefore, consumers who have turned to mobile banking for their financial needs must protect their financial privacy from cybersecurity breaches.

What Is Mobile Banking?

Mobile banking allows customers to access their financial institutions and conduct transactions through their mobile devices. Initially, this began with SMS Banking, which allowed customers to conduct various financial transactions by sending and accepting SMS messages or “texts.” In its most basic form, mobile banking allows customers to access their bank accounts and check on financial transactions. However, as the systems have progressed, customers can now make bill payments, transfer funds, and monitor deposits. Indeed, customers can now manage their investment portfolios and rearrange their investments through a smartphone or tablet. This has certainly increased everyday conveniences. However, it has also contributed to the speed with which finances can shift. Although, customers can review and monitor their accounts faster and more regularly, this also means greater security threats for the underlying financial information. This expansive access may lead to greater unauthorized breaches.

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In the aftermath of high profile cybersecurity breaches, businesses and consumers are alert to the real dangers of cyber vulnerability. In response, various government agencies have taken up efforts to protect against future breaches. Thus, consumers and businesses must continue to take steps to protect themselves and their private information. Accordingly, the office of California’s Attorney General has issued Cybersecurity Guidelines aimed at reducing the threat of electronic security leaks. Furthermore, these guidelines set the standard that businesses must meet to protect customer privacy.

What Are Attorney General’s Cybersecurity Guidelines?

The Attorney General outlined the basics steps to “minimize cyber vulnerability.”  First, anyone could be a target. Therefore, assume cybersecurity could affect you and take preemptive steps to protect your network.  Also, it is important to know where you store your data. The guidelines are directed towards small to medium-sized firms.  So, they focus on the importance for businesses to know which third parties hold company information. It is important to be familiar with these third-party security measures. If a data storage company is not taking proper steps to protect cybersecurity, it may be time to seek different storage options or take steps to counter the vulnerabilities. Alternatively, if your business stores information on the cloud, make sure to back up information, and store data only with secure entities. The overall point is that in the event of a breach, the level of preparedness will limit the consequences.  Next, encrypt your data as an added measure of security. It is also helpful to include firewall and antivirus protection on all devices.  Additionally, make sure to conduct banking and other financial transactions with reliable vendors.  Especially when dealing with third party financial information, the safety and security of those transactions are vital to ongoing business.  Finally, it is important to note that these guidelines are the minimum requirements. It is not a comprehensive list and companies must take care to implement personalized measures based on their cybersecurity needs.

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