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The Federal Trade Commission announced on January 17, 2008 that it has agreed in principle to a consent order with Life is good, Inc. and Life is good Retail, Inc. (collectively “Life is good”) resolving allegations that the apparel company collected sensitive information from consumers and failed to secure it in compliance with its own privacy and security policies. The consent order against Life is good, among other things, prohibits future deceptive privacy and security claims and requires the company to implement a comprehensive information security program that includes biennial audits by an independent security professional for the next twenty years.
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In a unanimous panel opinion issued on January 28, 2008, the Ninth Circuit upheld the National Labor Relations Board’s (NLRB) newly-announced three-factor test for determining whether employer surveillance activity of potential union members is coercive and therefore in violation of the National Labor Relations Act (NLRA). The case, Local Joint Executive Board of Las Vegas et al. v. NLRB, No. 05-75515, — F.3d –, 2008 WL 216935 (January 8, 2008), involved two incidents of alleged surveillance of union activities at Aladdin Gaming, LLC, in which Aladdin officials conferred with employees in the cafeteria who had been presented with union cards.

On December 18, the FTC announced a settlement in its 15th case (and its first in 13 months) addressing the data security practices of companies handling sensitive consumer information. American United Mortgage Company agreed to pay a $50,000 penalty for failing to implement reasonable safeguards to protect customer information and failing to provide customers with privacy notices.
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FTC staff issued a statement today proposing four “self-regulatory” principles to guide businesses engaged in online behavioral advertising. FTC staff also seeks public comments on these principles as well as additional information on what other uses businesses are making of online tracking data. Interested parties can submit comments by February 22, 2008.

The statement, titled “Online Behavioral Advertising: Moving the Discussion Forward to Possible Self-Regulatory Principles” follows from the FTC’s town hall meeting held in early November 2007. There, FTC considered privacy issues raised by behavioral advertising and heard from consumer interest groups and businesses’ alike.

Following is an updated list of citations to state data breach notification laws. We also note that as of January 1, 2008, California’s data breach notification law, Civil Code § 1798.82, will include “medical information” and “health insurance information” in the definition of personal information. Also, any business “maintained for the purpose of managing medical information” must comply with the prohibitions of California’s Confidentiality of Medical Information Act, effective January 1. These changes were enacted through A.B. 1298, signed by Governor Schwarzenegger on October 14, 2007.

According to a recent federal court ruling, a telephone customer is bound by the terms of an online business’s privacy policy and terms of use to which the salesperson referred during the call. In Greer v. 1-800-Flowers.com, Inc., No. H-07-2543 (S.D. Tex. Oct. 3, 2007), the U.S. District Court for the Southern District of Texas enforced a forum selection clause contained in the website’s terms of use against a consumer who ordered flowers for his girlfriend on the telephone. Before placing his order, the plaintiff inquired as to the company’s privacy practices and a 1-800-Flowers.com representative referred him to the company’s online privacy policy. Plaintiff claimed he relied on this policy when he completed his order. The privacy policy clearly stated that it was part of the website’s terms of use, which the plaintiff did not read and which included a forum selection clause.

In follow-up to our earlier blog post regarding recent pressure on social networking sites from law enforcement, New York Attorney General Andrew Cuomo announced yesterday that his office had entered into a settlement with Facebook. The settlement resolves the Attorney General’s investigation of Facebook’s failure to fulfill public claims it made about protecting minors, which the Attorney General believed were deceptive acts and practices and false advertising in violation of New York consumer protection laws. Facebook did not admit to any wrongdoing.