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Category: Consumer Protection Law

Lochner Boo Boo: Free Self-Exploitation?

American legal history has featured many battles over “freedom of contract,” often interpreted as the “right” of workers to sell their labor at any price, under any terms. Given the recent resurgence of extreme freedom of contract views, I thought this reflection on the reality TV show “Here Comes Honey Boo Boo” might interest readers:

Americans, it turns out, can’t get enough of Honey Boo Boo, mom June, and the rest of the clan . . . some of whom come with nicknames that seem straight out of a quaint novel about those colorful southerners, like Sugar Bear. That Here Comes Honey Boo Boo trafficked in and showcased the grossest of gross stereotypes about lower middle class southern white folk was deemed inconsequential. The family, led by matriarch June, was in on the joke. How could the family be exploited if they actively wanted to be exploited?

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Big Data for All

Much has been written over the past couple of years about “big data” (See, for example, here and here and here). In a new article, Big Data for All: Privacy and User Control in the Age of Analytics, which will be published in the Northwestern Journal of Technology and Intellectual Property, Jules Polonetsky and I try to reconcile the inherent tension between big data business models and individual privacy rights. We argue that going forward, organizations should provide individuals with practical, easy to use access to their information, so they can become active participants in the data economy. In addition, organizations should be required to be transparent about the decisional criteria underlying their data processing activities.

The term “big data” refers to advances in data mining and the massive increase in computing power and data storage capacity, which have expanded by orders of magnitude the scope of information available for organizations. Data are now available for analysis in raw form, escaping the confines of structured databases and enhancing researchers’ abilities to identify correlations and conceive of new, unanticipated uses for existing information. In addition, the increasing number of people, devices, and sensors that are now connected by digital networks has revolutionized the ability to generate, communicate, share, and access data.

Data creates enormous value for the world economy, driving innovation, productivity, efficiency and growth. In the article, we flesh out some compelling use cases for big data analysis. Consider, for example, a group of medical researchers who were able to parse out a harmful side effect of a combination of medications, which were used daily by millions of Americans, by analyzing massive amounts of online search queries. Or scientists who analyze mobile phone communications to better understand the needs of people who live in settlements or slums in developing countries.

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FTC Agonistes: From the Nader Report to the Wired Report

In 1968, a group of law student researchers helped Ralph Nader publish a highly critical report on the Federal Trade Commission. They concluded that the FTC failed to “detect violations systematically,” to “establish efficient priorities for its enforcement energy,” to “enforce the powers it has with energy and speed,” and to “seek sufficient statutory authority to make its work effective.” As Tim Muris notes, the report “lambast[ed] the agency and characteriz[ed] its overall performance as ‘shockingly poor.’”

The FTC has taken many important initiatives to respond to concerns identified in the report. But we must now reconsider agency’s record, as the digital world changes kaleidoscopically and budget restraints hamstring even the best-intentioned FTC staff.

About the closest thing we’re likely to get to another “Nader Report” was Peter Maass’s expose in Wired on challenges facing privacy enforcement and consumer protection in the digital age. Here’s one of the many issues he identifies:

The mismatch between FTC aspirations and abilities is exemplified by its Mobile Technology Unit, created earlier this year to oversee the exploding mobile phone sector. The six-person unit consists of a paralegal, a program specialist, two attorneys, a technologist and its director, Patricia Poss. For the FTC, the unit represents an important allocation of resources to protect the privacy rights of more than 100 million smartphone owners in America. For Silicon Valley, a six-person team is barely a garage startup. Earlier this year, the unit issued a highly publicized report on mobile apps for kids; its conclusion was reflected in the subtitle, “Current Privacy Disclosures Are Disappointing.” It was a thin report, however. Rather than actually checking the personal data accessed by the report’s sampling of 400 apps, the [17 page] report just looked at whether the apps disclose, on the sites where they are sold, the types of personal data that would be accessed and what the data would be used for.

As Maass notes, “The agency can take companies to court, but its overworked lawyers don’t really have the time to go the distance against the bottomless legal staffs in Silicon Valley.” Like an SEC pushed by budget constraints to pursue mere “cost of doing business” settlements, the FTC too often has to capitulate to symbolic penalties with dubious deterrent effect.
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Privacy: For the Rich or for the Poor?

Some consider the right to privacy a fundamental right for the rich, or even the rich and famous. It may be no coincidence that the landmark privacy cases in Europe feature names like Naomi Campbell, Michael Douglas, and Princess Caroline of Monaco. After all, if you lived eight-to-a-room in a shantytown in India, you would have little privacy and a lot of other problems to worry about. When viewed this way, privacy seems to be a matter of luxury; a right of spoiled teenagers living in six bedroom houses (“Mom, don’t open the door without knocking”).

 

To refute this view, scholars typically point out that throughout history, totalitarian regimes targeted the right to privacy even before they did free speech. Without privacy, individuals are cowed by authority, conform to societal norms, and self-censor dissenting speech – or even thoughts. As Michel Foucault observed in his interpretation of Jeremy Bentham’s panopticon, the gaze has disciplinary power.

 

But I’d like to discuss an entirely different counter-argument to the privacy-for-the-rich approach. This view was recently presented at the Privacy Law Scholar Conference in a great paper by Laura Moy and Amanda Conley, both 2011 NYU law graduates. In their paper, Paying the Wealthy for Being Wealthy: The Hidden Costs of Behavioral Marketing (I love a good title!), which is not yet available online, Moy and Conley argue that retailers harvest personal information to make the poor subsidize luxury goods for the rich.

 

This might seem audacious at first, but think of it this way: through various loyalty schemes, retailers collect data about consumers’ shopping habits. Naturally, retailers are most interested in data about “high value shoppers.” This is intuitively clear, given that that’s where the big money, low price sensitivity and broad margins are. It’s also backed by empirical evidence, which Moy and Conley reference. Retailers prefer to tend to those who buy saffron and Kobe Beef rather than to those who purchase salt and turkey. To woo the high value shoppers, they offer attractive discounts and promotions – use your loyalty card to buy Beluga caviar; get a free bottle of Champagne. Yet obviously the retailers can’t take a loss for their marketing efforts. Who then pays the price of the rich shoppers’ luxury goods? You guessed it, the rest of us – with price hikes on products like bread and butter.

 

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Volume 59, Issue 5 (June 2012)

Volume 59, Issue 5 (June 2012)


Articles

Implicit Bias in the Courtroom Jerry Kang et al. 1124
The Supreme Court’s Regulation of Civil Procedure: Lessons From Administrative Law Lumen N. Mulligan & Glen Staszewski 1188


Comments

Techniques for Mitigating Cognitive Biases in Fingerprint Identification Elizabeth J. Reese 1252
Credit CARD Act II: Expanding Credit Card Reform by Targeting Behavioral Biases Jonathan Slowik 1292
Shocking the Conscience: What Police Tasers and Weapon Technology Reveal About Excessive Force Law Aaron Sussman 1342

Automated Arrangement of Information: Speech, Conduct, and Power

Tim Wu’s opinion piece on speech and computers has attracted a lot of attention. Wu’s position is a useful counterpoint to Eugene Volokh’s sweeping claims about 1st Amendment protection for automated arrangements of information. However, neither Wu nor Volokh can cut the Gordian knot of digital freedom of expression with maxims like “search is speech” or “computers can’t have free speech rights.” Any court that respects extant doctrine, and the normative complexity of the new speech environment, will need to take nuanced positions on a case-by-case basis.

Digital Opinions

Wu states that “The argument that machines speak was first made in the context of Internet search,” pointing to cases like Langdon v. Google, Kinderstart, and SearchKing. In each scenario, Google successfully argued to a federal district court that it could not be liable in tort for faulty or misleading results 1) because it “spoke” the offending arrangement of information and 2) the arrangement was Google’s “opinion,” and could not be proven factually wrong (a sine qua non for liability).
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Swindling/Selling, Bribing/Contributing, Extorting/Taxing

At the recent Security and Human Behavior conference, I got into a conversation that highlighted perhaps my favorite legal book ever, Arthur Leff’s “Swindling and Selling.”  Although it is out of print, one measure of its wonderfulness is that used copies sell now for $125.  Then, in my class this week on The Ethics of Washington Lawyering (yes, it’s a fun title), I realized that a key insight from Leff’s book applies to two other areas – what is allowed in campaign finance and what counts as extortion in political office.

Swindling/selling.  The insight I always remember from Leff is to look at the definition of swindling: “Alice sells something to Bob that Bob thinks has value.”  Here is the definition of selling: “Alice sells something to Bob that Bob thinks has value.”  See?  The exchange is identical – Bob hands Alice money.  The difference is sociological (what society values) and economic (can Bob resell the item).  But the structure of the transaction is the same.

Bribing/contributing.  So here is a bribe: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.”  Here is a campaign contribution: “Alice gives Senator Bob $10,000 and Bob later does things that benefit Alice, such as a tax break.”  Again, the structure of the transaction is identical.  There are two likely differences: (1) to prove the bribe, the prosecutor has to show that Bob did the later action because of the $10,000; and (2) Alice is probably careful enough to give the money to Bob’s campaign, and not to him personally.

 Extorting/taxing.  Here is the classic political extortion: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.”  Here is how it works when a federal or state government hires someone: “Alice hires Bob, and Bob has to hand back ten percent of his salary to Alice each year.”  The structure of the transaction is the same – Bob keeps 90% of the salary and gives 10% to Alice.  The difference here?  Like the previous example, the existence of bureaucracy turns the bad thing (bribing or extorting) into the acceptable thing (contributing/taxing).  In the modern government, Alice hires Bob, and Bob sends the payment to the IRS.  The 10% does not go to Alice’s personal use, but the payment on Bob’s side may feel much the same.

For each of these, drawing the legal distinction will be really hard because the structure of the transaction is identical for the lawful thing (selling, contributing, taxing) and for the criminal thing (swindling, bribing, extorting).  Skeptics can see every transaction as the latter, and there is no objective way to prove that the transaction is actually legitimate.

I am wondering, did people know this already?  Are there citations to previous works that explain all of this?  Or, perhaps, is this a simple framework for describing things that sheds some light and merits further discussion?

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Epic Fantasy and Plot Plumping

Let the Dragon Ride Again (and Again, and Again, and Again)

Jim Rigney, the real name of Robert Jordan (best-selling author of the high-fantasy Wheel of Time Series), died several years ago. Shortly after he did, one of his friends wrote:

“Subject: Re: Who Should Not Finish WoT for Robert Jordan
From: MikesMadhouse Listmanager <MikesMadhouse.listmana@bar.baen.com>
Date: Wed, 19 Sep 2007 06:36:49 -0400
To: (Recipients of ‘MikesMadhouse’ suppressed)

From: David Drake

Dear People,

What I said was that when Jim Rigney’s work became a significant part of not only the Tor but the Von Holzbrink bottom line, the plots for individual volumes were decided by very highly placed people in council with the author.

Business was expanded to a complete volume where it might originally have been one of several strands in a volume, and the action in minor theaters (so to speak) was followed when the author might have been willing to elide it.

I further said and will repeat: there were quite a lot of people who sneered at ‘Robert Jordan’ but whose own books wouldn’t have been published without the Wheel of Time to subsidize them. Since the onset of Jim’s (Jim Rigney’s) illness, he hadn’t been able to write–and a lot of those people are not being published any more.

Dave Drake”

 

Fantasy blogs have been debating whether Drake was telling the truth.  Obviously, if he were, it’d go a long ways to explaining why the quality of the series (which was a precursor to the Game of Thrones, and its rival in quality at least when it started) declined so precipitously.  It’s also quite irritating, and the kind of thing that makes me want to illegally download pirated e-books, or something.

But, it’s worth pointing out that despite the nastiness of this kind of publishing practice, I can’t imagine there is a thing about plot plumping which is legally actionable. That’s so even though 1) these books were extremely expensive; 2) Tor and Rigney allegedly made several million dollars per book in the series in hardcover sales alone; 3) consumers (like me!) would have been misled to think that the book was a substantial attempt to move the series forward, when actually it was just an exercise is cow-milking; 4) the purpose of this cow-milking was to profit Rigney and subsidize other authors in the firm’s booklist.  Or to put it another way, fraud isn’t the same as sharp business practice.

 

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The Memory Hole

On RocketLawyer’s Legally Easy podcast, I talk with Charley Moore and Eva Arevuo about the EU’s proposed “right to be forgotten” and privacy as censorship. I was inspired by Jeff Rosen and Jane Yakowitz‘s critiques of the approach, which actually appears to be a “right to lie effectively.” If you can disappear unflattering – and truthful – information, it lets you deceive others – in other words, you benefit and they are harmed. The EU’s approach is a blunderbuss where a scalpel is needed.

Cross-posted at Info/Law.

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The E.U. Data Protection Directive and Robot Chicken

The European Commission released a draft of its revised Data Protection Directive this morning, and Jane Yakowitz has a trenchant critique up at Forbes.com. In addition to the sharp legal analysis, her article has both a Star Wars and Robot Chicken reference, which makes it basically the perfect information law piece…