Tag Archive | "FTC compliance attorney"

CRTC Issues Penalties for Malware Distribution

The Canadian Anti-Spam Law (CASL) does not just prohibit non-consensual commercial messages.  The  Canadian Radio-television and Telecommunications Commission also enforces CASL’s prohibitions on  the non-consensual installation of software onto a person’s computer.

As reported by FTC (CID) investigation defense lawyer Richard B. Newman, on July 11, 2018, the CRTC issued Notices of Violation to Datablocks and Sunlight Media for purportedly  aiding in the installation of malicious computer programs through the distribution of online advertising.  The CRTC alleges that Sunlight Media accepted unverified customers that used their advertising services to distribute malware.  The CRTC also alleges that Datablocks provided the clients of Sunlight Media’s unverified customers with the means to place ads that contained malicious computer code.

The CRTC cited various compliance issues, including, but not limited to, the failure to monitor service usage, the absence of written compliance programs (despite having been warned about cybersecurity issues in 2016) and deficient contracts that failed to mandate compliance with CASL.  Attorney general (AG) defense lawyer Richard Newman has previously blogged about advertising regulatory policy in the U.S. regarding the importance of monitoring marketing partners.

According to the CRTC, the action included penalties of $100,000 for Datablocks and $150,000 for Sunlight Media.

The Chief Compliance and Enforcement Officer, Canadian Radio-television and Telecommunications Commission, stated “[a]s a result of Datablocks and Sunlight Media’s failure to implement basic safeguards, simply viewing certain online ads may have led to the installation of unwanted and malicious software.  Our enforcement actions send a clear message to companies whose business models may enable these types of activities.  Businesses must ensure their commercial activities do not jeopardize Canadians’ online safety. ”

Online advertising is one of the primary ways that malware is distributed.  This matter marks the first time that the CRTC has taken action against the installation of malicious software through online advertisements under CASL.

Written compliance policies and responsible contracts are critical in today’s hyper-aggressive online advertising regulatory landscape.  The FTC and state AGs expect all those in the digital marketing ecosystem to responsible vet and monitory marketing partners.

Richard B. Newman is an FTC compliance and defense lawyer at Hinch Newman LLP focusing on advertising and digital media matters.  Follow him on Twitter @FTCLawDefense.

Informational purposes only. Not legal advice. Always seek the advice of an attorney. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777.


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FTC Defense Lawyer on Action Illustrating Need to Hold Partners Accountable

The Federal Trade Commission recently announced the settlement of allegations that marketers deceived consumers via a get-rich quick scheme.  According to reports, the operators have agreed to a permanent ban on marketing or selling certain types of software.

The FTC alleges that the international network of defendants deceived consumers by falsely claiming they could earn big money (e.g., “60k a month on 100% autopilot” and “beginners and normal people just like you” could pull in “$4,000 a day using their cell phones”) working online by using products marketed as “secret codes.”  According to the Commission, these products were generic software applications that could help the user make mobile-friendly websites.  The complaint charges the defendants with acquiring millions of dollars in “ill-gotten gains.”

Interestingly, the complaint also alleges that the defendants contacted consumers via affiliate marketers primarily with deceptive SPAM emails in violation of the FTC Act’s prohibition against deceptive practices.  The FTC alleges that consumers visited the defendants’ websites and were met with additional deceptive claims, including relentless pop-up advertisements and  videos that featured individuals that made unsubstantiated earnings claims.  The FTC’s case also includes allegations that the defendants failed to honor the stated refund policy.

While the Federal Trade Commission does not regularly included allegations of CAN-SPAM violations, here, the agency alleges the existence of misleading subject lines, the failure to clearly and conspicuously identify commercial email as an “advertisement,” the failure to include a physical address and the absence of a statutorily required opt-out mechanism.  Consult with an FTC law firm to discuss state and federal email marketing compliance requirements and trends.

According to reports, the defendants agreed to a $7M judgment which shall be partially suspended upon payment of approximately $700,000.

The defendants also are prohibited from marketing or selling money-making software, from making misrepresentations in the promotion, marketing or sale of any product or service, and from violating the CAN-SPAM Act.

Takeaway:  In addition to private plaintiffs, state and federal regulators actively enforce email marketing compliance requirements.  Both the company that presses SEND and the company on whose behalf it is working may be held legally responsible for CAN-SPAM violations.  Additionally, those making unsubstantiated earnings claims or misleading claims regarding the nature of the products/services being offered should be prepared to write Uncle Sam a check and for lifetime bans on certain marketing activities.  The enforcement action also reminds marketers that anyone and everyone in the affiliate marketing ecosystem can be held liable for possessing actual or constructive knowledge of deceptive practices.

Richard Newman is an FTC advertising compliance and defense attorney at Hinch Newman LLP Email him at rnewman@hinchnewman.com, or call him at (212) 756-8777.

ADVERTISING MATERIAL. Informational purposes only. Not legal advice. Always seek the advice of an attorney. Previous case results do not guarantee similar future result. Hinch Newman LLP | 40 Wall St., 35th Floor, New York, NY 10005 | (212) 756-8777

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FTC Announces Campaign to Help Businesses Strengthen Cyber Defenses

The Federal Trade Commission has recently announced plans to launch a national education campaign to assist small businesses strengthen their cyber defenses and protect sensitive data that they store.

As outlined in a new Staff Perspective report, the FTC will develop and distribute reader-friendly educational materials with information about cybersecurity that small businesses need.  The effort grew out of the Small Business & Cybersecurity Roundtables that the FTC hosted last year with small business owners and non-profit organizations, employees, and managers to learn about the challenges they face when dealing with cyber threats and security and ideas for how the government can help them.

The report describes the FTC’s plain-language materials for small businesses and non-profit organizations that generally do not have in-house information technology staff.  It explains the FTC’s partnerships with federal agencies and industry associations to promote cybersecurity in small organizations.  It also details the FTC’s plans to commence in 2018, in partnership with other key federal agencies, a campaign to educate small businesses on cybersecurity.

“Small businesses understand the importance of cybersecurity and the need to protect their networks and data, but many feel overwhelmed about how to address the myriad of cyber threats they face,” said Tom Pahl, Acting Director of the FTC’s Bureau of Consumer Protection. “Our new campaign aims to help these small businesses with targeted, plain-language advice on everything from protecting against phishing scams to tips on what to look for when choosing a cybersecurity vendor.”

The campaign will build on the work the FTC has already done under Acting FTC Chairman Maureen K. Ohlhausen.  This includes the small business cybersecurity roundtable discussions and the launch of a website in 2017 aimed at helping small businesses avoid scams and protect their networks and data.  The FTC also has developed several cybersecurity publications aimed at businesses of all sizes including business guides Start with Security, Data Breach Response and Protecting Personal Information and the Stick with Security blog series.

Among the issues that small business owners identified during the roundtable discussions are how to avoid phishing schemes, ransomware attacks and tech support scams, as well as cybersecurity basics.  Small business owners also wanted information about how to protect company mobile devices, and a list of questions they should ask vendors to ensure their systems are secure.

To address these concerns, the FTC is creating up to a dozen sets of information on issues of importance to small business owners that will include training modules and videos.  Potential topics include phishing, ransomware, email authentication, cloud security, tech support scams, vendor security, how to compare offers of web hosting services, understanding the National Institute of Standards and Technology cybersecurity framework, and others.

In addition, the FTC will work with other government agencies to help develop more consistent messaging about cybersecurity and expand its work with the private and non-profit sectors to help get the materials developed by the FTC to more small businesses.

Contact the author if you are interested in learning more about the design and implementation of compliant privacy and data security protocols, or if you are the subject of a state or federal regulatory investigation.

Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state Attorneys General, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements. You can find him on LinkedIn at FTC Defense Lawyers.


ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result. Hinch Newman LLP | 40 Wall St., 35thFloor, New York, NY 10005 | (212) 756-8777.



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