Business Record - Iowa Biz

Judges Handing Down Real Time For CyberCrime

Everyone knows that hacking into an ex-employer's computer network, shutting down the email system and deleting core files will land you in prison. Federal laws were designed to catch these types of hackers and put them away. But what about you? Have you every violated any of the dozens of federal laws governing computer and Web site misuse? It might surprise you to know, but odds are you have.

Do you carefully read the terms of use on every Web site you visit? Were you aware that violating those terms could result in twenty years in prison and a $1 million fine?

Recently, a federal judge sentenced a television news anchor, caught snooping through his co-anchor's email, to six months of home confinement, 250 hours of community service and a $5,000 fine. He was also summarily fired from his $700,000/yr job. Selling your company's confidential information? That may just earn you a ten year all expense paid prison vacation. Sending threatening emails? Up to ten years in prison.  Selling impostor watches on eBay? Seventy years. Even if you are acquitted, you may have to fight a costly legal battle a half a continent away.

The bottom line is that federal investigators are cracking down on cybercrime now more than ever before. More importantly, judges are handing down harsher and harsher sentences. Given the huge potential criminal penalties involved with something as seemingly innocuous as violating a Web site's terms of use, it is well worth educating yourself about the dos and most-certainly-do-nots of cyberlaw.

Brett Trout

Defamation 2.0

Defamation

Defamation is defined by state laws, which vary from state to state.  Generally, defamation is defined as a false, published statement, which harms someone's reputation.  It is these three elements: Falsity, Publication and Harm, which qualify a statement as defamatory. Written defamatory statements are referred to as Libel, and spoken defamatory statements are referred to as Slander.  While online and offline defamation are treated the same there are a few subtleties to online defamation that do not directly apply to offline defamation.  To appreciate these subtleties, it is important to understand defamation in general.

 

Publication

Publication simply means that the statement was understood by a third party other than the defamer or the defamed. It only takes one other person to understand the statement to find liability. If the person alleging defamation is the one relaying the false statement to the third party, however, that does not constitute publication. “Qualified” and “Absolute” privileges prevent certain kinds of statements from being defamatory publications. In certain instances, these privileges allow a lawyer to make statements in the context of a court proceeding or a crime victim to make a statement to a police officer without being found liable for defamation.

 

Opinions

The First Amendment to the U.S. Constitution grants an "opinion privilege." While the opinion privilege carves out wide protection, simply adding "It is my opinion that . . ." in front of an otherwise defamatory statement does not insulate the defamer from liability. The privilege protects only two types of speech: 1) that which is not “capable” of being proven false; and 2) that which cannot reasonably be “interpreted as stating actual facts” about the plaintiff. 

 

The first type of protected opinion relates to assertions such as calling someone a “Butthead“ or opining “due to ongoing financial pressures, the outlook for ABC Corp. refunding its bond is negative.” How could you possibly prove these statements false?  If it is not false, it is not defamation. The second type of protected opinion relates to statements that "appear" to relate to specific facts, but which cannot reasonably be “interpreted as stating actual facts” about the plaintiff.  Even if the defamer uses terms like “blackmail” and “traitor” there is no defamation if the statement is clearly satirical. This privilege goes so far as to protect Larry Flynt printing an ad parody of Jerry Falwell having sex with his own mother in an outhouse was found by the courts to be clearly related to rhetorical hyperbole, or use in a loose figurative sense.  Regardless of how inappropriate the publication might have been, it was not defamatory.

 

Damages

Although damages are presumed in most types of defamation cases, proving evidence of actual damage often increases the eventual monetary award. Damages in a defamation case can be shown through a detailed description of the victim's prior reputation and the extent to which the defamatory statement was distributed.  Associated damages may include loss of income, emotional distress, physical pain and suffering, medical bills for mental anguish, humiliation and embarrassment.

 

Malice

In some instances, such as when the victim is a public figure, or when you are seeking punitive damages, you do have to prove actual malice. Actual malice typically means that the statement is either made with knowledge that it is false or with reckless disregard for whether or not it is false.

 

Defamation Online

Blogs and other forms of social media are treated the same as other forms of main stream media. In the real world, individuals are just as liable as the defamer if they repeat a statement they know is defamatory. In the online world however, Section 230 of the Communications Decency Act grants bloggers a little wiggle room. Section 230 states that providers of interactive computer service are not treated as "publishers" of any information provided by a third party. This applies to guest posters, comments, forum posts et cetera. This immunity, however, does not relate to information selected or edited by the blogger, or to other claims, such as intellectual property infringement.

 

Avoiding a Lawsuit

Defamation often incites plaintiffs to bring cases they might not otherwise bring. Even if the case is difficult to prove and the damages small, plaintiffs often bring defamation cases to vindicate what they see as a moral wrong.  Avoiding a lawsuit for defamation involves much more than following the foregoing rules.  It involves assessing the "victim" to determine if they are someone who might bring a defamation suit regardless of whether or not the law is on their side.  In terms of bringing a suit for defamation, it is important to assess whether the lawsuit will cause more harm than good in drawing attention to an esoteric blog post no one would otherwise have read. In both instances, discretion is the better part of valor.

Brett Trout

 

Obama vs McCain: Courting the Tech Vote

Amidst the online punditry over presidential candidates, there is very little actual insight as to how the candidates' platforms might affect those in the information technology profession and, by extrapolation, those of us who use and rely on information technology. While I have strongly conservative leanings, having voted Republican since I was old enough to reach the lever, this year's election has me thinking with a much more tech-based Libertarian mindset.

According to TechCrunch, the second most popular blog on the planet, information technology voters strongly prefer the policies of Ron Paul over the rest of the field. Ron Paul, however, is no longer in the race, so here is how the two remaining major party candidates stack up on the issue of technology:

Net Neutrality
Winner: Barack Obama
Net Neutrality refers to the idea that you should be allowed to access any portion of the Internet you like. If the big Internet Service Providers want to prevent you from visiting Web sites that do not pay them an advertising kickback, or charge more to visit selected "packages" of Web sites, much like cable does now, there is nothing to prevent that from happening.

Sen. Barack Obama has stated that signing a guarantee of Net Neutrality into law will be a priority during his first year in office. Conversely, Sen. John McCain opposes Net Neutrality legislation.

Privacy
Winner: None
Both Sen. McCain and  Sen. Obama state that they are interested in preserving and strengthening the online privacy of their constituents. In terms of putting their votes where their platforms are, however, both Sen. Obama and Sen. McCain voted in favor of the Foreign Intelligence Surveillance Act (FISA). These amendments grant immunity to electronic communication service providers that conspired with the government to spy on United States citizens. Regardless of the rhetoric, this vote indicates that neither candidate is a stalwart protector of online privacy rights.   

Copyright
Winner: Obama
Both candidates support a strong stance against foreign infringement of music and movie copyrights. If both candidates follow through with their other copyright proposals, as opposed to merely dumping taxpayer money behind stopping the overseas sales of bootleg copies of Gigli, the plans seem equally beneficial. With regard to the controversial Digital Millennium Copyright Act (DMCA), however, there is a difference between the candidates. The DMCA offers safe harbor to Internet Service Providers (ISPs) accused of hosting copyright infringing material on their servers. If the material was posted by a third party, the ISP merely removes the accused material and forwards the complaint to the third party poster. If the poster submits a defense to the ISP, the ISP reposts the material and sends the reply to the complainant.

Recently, this issue arose in the context of the presidential campaign. A YouTube video in support of Sen. McCain was taken down in response to an allegation of copyright infringement under the DMCA. Per the DMCA, YouTube took down the videos and forwarded the complaint on to the McCain campaign. Instead of merely following DMCA protocols, or attacking the DMCA itself as being intrinsically unfair, the McCain campaign wrote a letter to YouTube explaining why it should receive VIP treatment and not have its videos taken down.  This "I make the online rules, but I do not have to follow them" mentality is certainly frightening. For this fantastic mix of hubris and cojones alone, McCain falls far short on the issue of online copyright protection.

Other Intellectual Property
Winner: Tie
President Bush just signed the Prioritizing Resources and Organization for Intellectual Property Act of 2007 (PRO-IP Act), into law. The PRO-IP Act creates a new Intellectual Property Czar and promises federal government assistance in the policing of patents, trademarks and copyrights. Whether this means protecting the intellectual property interests of the "big guys" to the detriment of the "little guys" and stifling both innovation and online functionality in the process, will largely be determined by the philosophical bent of the next president.

Sen. Obama wants to reform the United States Patent and Trademark Office (USPTO) to make our patent system clearer and more predictable. He also sees the need to update our system of copyright to balance the interests of civic discourse, innovation and investment against the interests of copyright owners. Sen. McCain also supports additional resources for the USPTO, to ensure timely, predictable and effective patent review. In addition, Sen. McCain is interested in providing alternative approaches to patent litigation. While certainly a laudable goal, it is not clear how he intends to implement and manage such extremely complex reform.

The downfall of both plans is in the execution. Will the proffered reform be in favor of small inventors and intellectual property development, or in favor of large companies and a chilling of innovation? Only time will tell.

Technological Savvy
Winner: Obama
While technological savvy is by definition a very subjective category, it is probably the most important. Without some "hands on" experience with emerging technologies, tech issues are much less likely to come up on a candidate's radar, let alone be properly addressed. The more experience a candidate has with technology, the better equipped he or she will be to push legislation which either promotes or regulates that technology toward the greatest good. Just as caveman were not overly interested in regulating fire until they actually got burned, so to Luddite candidates have little interest in regulating things such as 700MHz spectrum auctions, until complex problems have arisen and the opportunity for a simple regulatory solution has long passed. Costs increase, delays ensure and hundreds of new technologies and businesses die on the vine, awaiting a solution.

So who's the man, when it comes to tech savvy? Well, despite John McCain having created the Blackberry, neither major party candidate is a techie's dream candidate. While voters at TechCrunch resoundingly favored Ron Paul, the two major-party candidates at least demonstrate a better grasp of tech issues than our current leaders.

Sen. McCain, while generally fairly pro-technology in his platform, takes a decidedly anti-net neutrality and anti-renewable energy stance. He has also admitted that he is "illiterate" when it comes to computers. Despite these flaws, Sen. McCain's strong leadership skills and tech savvy advisers make him far preferable to the existing leadership.

Sen. Obama's technology platform indicates computer "illiteracy" will not be a concern. Furthermore, his proposed resolution of complex tech issues indicates both a tech and consumer friendly approach.  While he may not be the best pro-tech candidate, he is certainly the most pro-tech of the viable candidates.

Information technology professionals often feel disenfranchised by candidates' clear ignorance of the issues affecting online activity. Especially disheartening is the fact that the next president's policies will govern for the next four years, a lifetime in the tech world. While the present election is clearly a choice between the lesser of two evils when it comes to technology issues, hopefully the foregoing analysis provides some basis for choosing a leader committed to increasing legislative attention paid to pro-tech and pro-consumer issues.

Brett Trout

Ignite Des Moines

Social Networking 2.0
Over the past year, Social Networking has taken the Internet by a storm. In its simplest form, social networking is an online cocktail party revolving around a common theme, interest or medium.  One of the hottest tools for exploiting the benefits of social networking is Twitter. Twitter is a Web site which allows you to write one hundred and forty character micro-blogs, which others can read in a scrolling "feed". Some Twitterers subscribe to hundreds of feeds, allowing them to be a part of dozens of simultaneous conversations. Sound confusing? It is actually very simple. Carolyn Elefant of www.myshingle.com, explains it best. Twitter bridges the gap between more passive online networking activities, such as blogging, and more traditional networking activities such as attending a sporting event with a prospective client.

Twitter Des Moines
A group of online entrepreneurs converting virtual conversations into real world handshakes may not seem all that unusual. What is unusual is that nowhere is this happening to a larger proportion of the population than right here in Des Moines. Des Moines "Tweeps" from sixteen to sixty not only share an exponentially expanding online conversation, but they regularly translate the conversation into impromptu real world meetings.

Coworking in the Capital City
One Tweep rising to the top of the local Twitter pack is entrepreneur Daniel Shipton. Shipton is the brains behind Iowa's first coworking venue, Impromptu Studio. After building an impressive following online -- as well as off -- Shipton has decided to give a little something back to his community. On Nov. 6, 2008, Shipton and Impromptu Studios will be hosting Ignite Des Moines.   

What is Ignite?
Ignite events revolve around a series of presenters allowed 20 slides and only five minutes to give what at most events would cover an hour or more of presentation time. This affords attendees the opportunity to take in a dozen highly-charged informative talks in the time it would otherwise take to see only one. The densely packed presentations are simultaneously informative and entertaining.

What Else Will I Experience?
In addition to the Ignite presentations, Ignite Des Moines will also include the 2008 Iowa Web Awards presentation by 48 Web, free food and libations, and an egg catapult engineering contest. The entire event is free and wraps up with several "150 second Expert" presentations. These closing presentations involve experts reprising their rapid-fire presentation style, albeit using slides they have never seen before and covering a topic far outside of their own expertise.  As results range from the hilarious to the often embarrassing they are not recommended for the easily offended.   

Most Importantly
While Shipton has gone out of his way to ensure the Ignite Des Moines program rivals that of much larger cities, the real draw is the Ignite community. From artists to entrepreneurs to those just interested in learning more about the vibrant entrepreneurial environment thriving in Greater Des Moines, Ignite Des Moines will draw people of all ages, experiences and backgrounds. The only commonality is that the attendees are all people you should get to know.

See you there!

Brett Trout

The Lawyer Bait-And-Switch

You’ve finally done it. After searching online, asking friends, family and other lawyers and conducting countless interviews, you have finally located the best lawyer in the world. He or she is smart, charismatic, personable and seems to know the law backward and forward. How can you lose with this lawyer on your side?

Fast forward six months later. An associate attorney in the same firm is sitting across from you explaining why your case is unraveling. All the while you are wondering whether this person even graduated from law school.  How did you go from hero to zero without so much as a simple explanation?

There are several legitimate reasons your lawyer might refer you to another lawyer: the other lawyer has a lower billing rate making cookie cutter work more affordable, the other lawyer has a special expertise outside the capability of your original lawyer, et cetera. However, one reason your lawyer might have brought in another lawyer to represent you is economics.

Some lawyers are lawyers while other lawyers are marketers. Unfortunately, there are a lot more lawyer/lawyers than marketer/lawyers. This places a huge premium on marketer/lawyers. While a great marketer/lawyer has no problem developing enough business to keep himself or herself busy, there is a limit to how much work one lawyer can do. Realizing this, and the fact they do not want their $200/hr lawyer/lawyers aimlessly pacing the halls with nothing to do, typically compensate marketer/lawyers for assisting lawyer/lawyers in finding work.

While a marketer/lawyer can only generate so much income billing legal work, there is almost no limit to the amount of income a lawyer can generate developing business for the other lawyer/lawyers in the firm.

So how do you know whether you are getting a new lawyer because it is best for you or best for your original lawyer? The easiest way is to discuss this issue with your lawyer before you hire him or her. Ask them if they will be your attorney for the duration of your engagement. Ask them what percentage of the services do they anticipate billing themselves. Ask them if they anticipate the need to bring other attorneys in on your case. If the attorney indicates other attorneys might be needed, ask to meet with those attorneys as well. Finally, ask if the lawyer has a direct number you can use in the event you have any questions.

Your lawyer’s responses to these questions should give you a fairly clear idea as to whether you are hiring a marketer/lawyer or a lawyer/lawyer. The key is to meet with the lawyer who will actually be handling your work before you hire them. Getting dumped on a lawyer you have never met is no way to start a productive attorney/client relationship. If the lawyer you hired has no interest in actually being your lawyer, you should probably be very interested in finding a new lawyer.

Brett Trout

Comcast's Ongoing Assault on Net Neutrality

What exactly is Net Neutrality?  

If you are like most people, it is probably the biggest thing you have never heard of.

Have you ever received a satellite television brochure detailing what packages you can get for what price? Well if Internet heavyweights such as AT&T, Comcast and Cox cable have their way, and destroy Net Neutrality, the Internet will be parsed up and packaged the same way. You want to visit cnn.com? That’s another $40 every year. eBay? Another $50 annually.

Who is Behind the Attack on Net Neutrality?

Just last month, the Federal Communication Commission sanctioned Comcast for intentionally blocking its customers from receiving certain Internet traffic. While most of you probably do not use the BitTorrent service that Comcast was blocking, without strong laws enforcing Net Neutrality there is nothing to stop these 800-pound gorillas from blocking your access to any service or Web site. Worse yet, there is nothing to stop them from blocking their customer's access YOUR company's website. Of course, if you were to pay a little extra, and their customers were to pay a little extra, I am sure these Internet service providers (ISPs) might find it in their hearts to reign in their officious hijinks. It is not difficult to see that this cannot help but result in you eventually being denied access to majority of the Internet.

What Can You Do?

Obviously, do not to sign up with an ISP that unilaterally makes decisions about what aspects of the Internet you can and cannot access. More importantly, you can demand your congressional representatives take immediate measures to ensure your continued access to the ENTIRE Internet, not just the part of the Internet willing to pay ISPs kickbacks in exchange for access. Check out your candidates' positions on Net Neutrality before you vote. For more information on what you can do, visit SaveTheInternet.com and The Open Internet Coalition. Do it now. Once Net Neutrality is gone it will never come back. Instead of billions of diverse and independent Web pages, you may one day find yourself surfing a much smaller Internet, one echoing only the sentiments of those commercial interests willing to pay to have their message heard.

Brett Trout

Internet Fraud

Not your grandfather's Internet fraud

When most people think of Internet fraud, they picture a grammatically-challenged Nigerian stuck in a boiler room emailing you that he is actually a preternaturally endowed and scantily clad young woman. Interestingly, this young woman is interested in paying you an enormously large stipend for your unique ability to send checks and merchandise through the mail. In actuality, while the Nigerian scam is still finding its share of patsies, it is getting so long in the tooth that scam-baiting Nigerian scammers has become its own cottage industry.

eBay's dirty little secret

So what is the most prevalent form of Internet fraud. Well, you might be surprised to learn that online auction fraud accounts for 44.9 percent of Internet fraud complaints referred to the FBI's Internet Crime Complaint Center (IC3).

This is more than twice the number of complaints received for the next highest category, check fraud (19 percent).  While it comes as no shock that most scammers are male, it might surprise you to know that the majority of Internet fraudsters reported to the FBI are from the United States, with more than half of the bad guys residing in one of seven states: California, Florida, New York, Texas, Illinois, Pennsylvania and Georgia. 

While the number of complaints is decreasing, the overall dollar loss from Internet fraud is increasing, totaling nearly a quarter of a billion dollars in 2007 alone. And that is just counting reported cases.

Types of auction fraud

A comprehensive list of online auction fraud schemes would fill its own book - and be out of date as soon as it hit the shelves. One of the most prevalent scams is of course taking your money and not sending the merchandise. While this type of scam is often associated with new sellers, seasoned scammers may "hijack" the legitimate account of a reputable seller.

Scammers hijack accounts through random emails asking you to pay for an item. The hope is that you may have coincidentally won an auction and do not notice the Web site linked from the email is a fake. You type in your password and voila. 

More than money

Other scams include selling bootleg or grey market goods.  Big ticket items, such as vehicles, may come with expensive to repair hidden defects.  Shill bidding and fine art fakes are two other types of online auction fraud, which may cost you thousands of dollars. Most importantly, if you resell bootleg, stolen, or fake items, you may find yourself in criminal trouble as well.   

Protecting yourself

Although eBay does have a buyer protection policy, unless you have been scammed for exactly $200, it is probably not going to turn your frown upside down.

Since eBay charges a $25 processing fee for the "service," all auctions under $25 are immediately excluded and auctions from $25 to $50 are probably not worth jumping through all the reimbursement hoops. eBay's policy will also only pay you a maximum of $175. So if you just got ripped off on that new car, $175 is probably not going to do a lot to ease the pain. eBay is simply not in the business of helping people who have been scammed.

Jumping through hoops

PayPal also has a rather complicated counter-intuitive dispute resolution policy. While eBay encourages you to contact your credit card company if you suspect fraud, PayPal will void your PayPal claim if you contact your credit card company before the PayPal claim process is completed. This is especially strange since eBay owns PayPal.

Checklist

The key is that if you are bidding more money on an online auction than you would be willing to lose, examine the online auction's fraud and buyer protection policies very carefully.

Also, if the seller has a ridiculously low "buy it now" price, is located out of the country, and/or suggests a strange payment method, you might want to pass on the auction altogether.

For all other auctions, check the seller's percentage of positive feedback and the length of time the seller has been registered with eBay. Even if you win an auction NEVER click on hyperlinks in auction emails you receive. If you have won an auction, log directly into your online auction account.

Other options

Most importantly, trust your intuition. If something does not seem right, or looks too good to be true, it probably is.

There is simply no way to ensure your online auction transaction will be 100 percent safe. You may also want to check out the possibility of  purchasing a similar item from a reputable online or local retailer.

Although the cost may be slightly higher (and sometimes even less), a direct purchase with the full protection of your credit card company may outweigh the risk associated with rolling the dice with our country's most commonly reported type of Internet fraud.

Brett Trout

Document Retention Road Kill

Is Your Company Road Kill Waiting to Happen?
In my last post I explained many of the dangers Cyberlaws pose to your company. Given the complexity of these laws, many companies choose a deer in the headlights approach. Fortunately, most of the time the strategy works. Unfortunately, when it doesn't, it ends up turning your company into so many tiny puzzle parts of corporate road kill.

That First Step
The hardest step for any company to take is that first one. Fears of being overwhelmed, of throwing money down the drain, or of starting in the wrong place all paralyze companies into inaction. So, where to start? Every company is different. Companies with a primarily online presence may be see the biggest return on investment investing in intellectual property protection. Other companies may be better advised to invest in areas which have proven to be problems for competitors.

Document Retention/Destruction
If you are unsure of where to begin, one of the areas where nearly every established company can benefit is in the area of document retention, or more precisely, document destruction. Now before you start getting all CIETC on your old documents, take a minute to determine how long your company needs to keep different types of documents. Your company may decide to destroy some documents, like text messages, after 30 days. Others, like information relating to corporate formation, you may need to keep forever.

Conservatives and Consistent
If you are not sure where to keep a certain type of document three years or five years, start with five. You can always adjust the term to be shorter at a later time. Avoid giving employees the incentive to archive documents outside of the system. Corporate packrats will not only add thousands of dollars and man hours to the cost of litigation, but the ongoing violation of the company's document retention policy may, in light of the new, more stringent, Federal Rules of Civil Procedure, lead a judge to fine and/or rule against your company in court.

Conscripting a document retention committee to draft a conservative document retention policy at least provides your company the opportunity to get rid of those Commodore 64 floppy disks your board has been using as retro coasters. Trust me, the cost of tracking down hardware to read this obsolete media far outweighs any potential benefit your high score on Moon Patrol might otherwise provide. Even for more recent data, the potential the data will hurt your company is typically greater than the potential it will help.

Most importantly, be consistent. Start off with only those policies you can police effectively. Having a policy which employees consistently violate is worse than having no policy at all. As employees adopt a rigorous approach to policy adherence, increase the scope of the policy until it becomes comprehensive. Once you have a comprehensive policy, revisit it periodically to accommodate changes to the law, your company and your methods of storing and retrieving documents. 

The Downside of Delay
Savvy lawyers are leveraging new rules on the production of electronic documents. Rather than have to find hardware to read, search and sort through millions of out-dated electronic files, companies without do cement retention policies often resort to paying settlements far in excess of what they might have paid before the implementation of the new rules. Worse,  your company's lack of a "legal hold" provision in its document retention policy may lead to enormous fines and/or prison sentences for destroying documents AFTER your company is sued. 

Form a document retention committee today. Have them put together a formal document retention policy. Start small. You can probably get rid of most corrupted storage media as well as media for which you no longer have the hardware to read. As noted above, there are few types of old electronic documents your company needs to keep forever. For the other 99%, it is better to get rid of it now. The other option would be to keep it until you get to take the witness stand staring at 2x3 foot cork board blow-ups of the documents while a somewhat less than cordial lawyer implements a much more well-conceived witness destruction plan.

Brett Trout

Worry About Internet Law Because . . .

• sending unsolicited emails may subject your company to millions of dollars in fines;
• praising a product without clearly indicating you were paid to do so is a Federal Trade Commission offense;
• failing to have a Document Retention Policy addressing the new Federal Rules of Civil Procedure may cause you lose a lawsuit even before it gets to a jury; and
• violating a website's terms of use policy may even land you in federal prison.

 

This is a tiny fraction of the laws regulating online commerce. So, how should a company avoid so many pitfalls?

Cyberlaws breed like rabbits. After a decade of uncontrolled evolution, the expansion of cyberlaws has created a Darwinian pond, so full of complex online laws no company is able track them all. Not knowing the laws makes orchestrating a three-year plan an exercise in futility.

 

Selling your Board of Directors on a costly, time consuming, comprehensive online risk management plan is difficult. Estimating a return on investment based upon the value of not losing the farm is a formidable calculation.

A more palatable way to tackle the problem of online risk is piecemeal. Grab the lowest hanging fruit first. Form a committee to tackle the next most cost effective cyberlaw issue each quarter. Before you realize, (hopefully before you are sued) your company will implement a customized, comprehensive system to address online risk.

 

In upcoming posts, I will, through an equally incongruous mix of metaphors, address issues that are easy to address, but if left unchecked have potential to bring your business to a grinding halt.

Brett Trout

Marketing Pitfalls of Social Networking

The Lure of Social Media
Social networking is all the rage amongst cutting edge marketing gurus.  Rather than force your message down the throats of random unreceptive consumers, social networking provides a platform whereby your best customers proselytize your message for you.

Not only is having customers doing the heavy lifting cheaper and easier, it is much more effective. Who is a potential customer more likely to believe, an infomercial or a friend? Assuming a certain savvy in friend selection, the answer is clearly the friend. When multiple friends join in evangelical rapture around a product, the drive to purchase soon becomes irresistible.

Off the Charts ROI
The low cost and high value of advertising via social networks is not lost on savvy companies. Hiring a handful of hipsters to tout your product's virtues online is relatively inexpensive.  Moreover, the results can be quite impressive. Not only will an effective social networking campaign result in a significant increase in sales, but it will increase brand loyalty and perceived brand value as well. 

The Necessity of Disclosure
One problem often overlooked by marketing agencies, however, is the necessity of full disclosure. While anyone is free to profess the wonders of Screaming Monkey Slingshots, if I were receiving compensation for such a promotion, I would have to ensure this relationship is clear to the you, the potential Screaming Monkey Slingshot purchasing consumer. 

The Law
In 2006, the Federal Trade Commission made it clear that if a paid endorsement "might materially affect the weight or credibility of the endorsement . . ., such endorsement must be fully disclosed. More recently, the United Kingdom has adopted similar provisions into it's lengthy new Consumer Protection from Unfair Trading Regulations. These prohibitions extend beyond merely paying stealth marketers to exploit social networking channels. The prohibitions extend to enlisting employees or other paid personnel to post anonymous comments, to advising fans to deceive others as to their involvement in a campaign and to posting fake product reviews.

The Ethics
So, what constitutes "full disclosure?" Unfortunately, there are few hard and fast rules. Obviously, regardless as to the extent of your disclosure or lack thereof, you never want to deny a paid relationship or deceive a consumer as to its existence. Beyond that, the message, the medium, the product and the promoter, all play a role in what constitutes acceptable minimum disclosure (AMD).

Blacklisted for Life
To assist companies in this regard, the Word of Mouth Marketing Association's Ethics 20 Questions provides a self-assessment to determine whether you might be in danger of violating not only government prohibitions on word of mouth advertising, but also your own customers' trust. Of particular note is question number 19, regarding "Hiring an Agency."

The question asks whether the advertising agency you are considering has "previously engaged in unethical practices." This should frighten a lot of marketers considering launching a social networking campaign. In addition to placing your agency at odds with the federal government, an ill-conceived social networking campaign may black-list your agency for life.

Brett Trout