Editor’s Note: This blog post was originally published on August 12, 2013, courtesy of iMedia Connection’s Blog. It is repurposed with permission.

This post is co-authored by Alan M. Pate.

There are three things a social media website operator or digital marketer probably hates to hear most before  launching an online ad campaign: 1. Can you make this go viral?; 2. How many likes/tweets can you get?; and 3. Did you run this by legal?  As attorneys, we are pretty familiar with the last one and are no strangers to that “oh man” grimace. Social media teams associate legal sign-off with at worst compromising creativity and at best a necessary evil. We are here to say – however – that contrary to your marketing predilections, a little legal knowledge up front can actually help with the final product by incorporating some basic legal concepts into your projects from the get-go.

This article doesn’t aim to be a textbook on the “Law of the Internets”. We know you wouldn’t read it if it was (and we wouldn’t have any fun writing that so what’s the point.) Rather, this article is a straight up summary of legal areas you should be aware of because they ultimately affect your business and bottom-line. Some basic knowledge of the relevant legal landscape up front may help save time, money – and avoid frustration – in the long run.  After all, knowing – as G. I. Joe so eloquently put it – is half the battle. In the first installment of this four-part summer series, we’ll cover the basics of privacy law.  In the next three installments, we’ll provide an overview of online marketing guidelines,  rules of the road for using third-party content, and finally, the pitfalls  marketers typically encounter when incorporating “user generated content” in advertising and promotions.

Part One: The Privacy Problem (With Big Data comes Big Responsibility)

Privacy is the right to be left alone. To consumers paying attention, in the social media and digital age there is a tacit agreement between customers and social media companies that we are willing to give up that right to be left alone in exchange for the benefits that social media provides, be it suggested purchases on your favorite retail site or your top-ten list on Netflix. With the explosion of all things social, it’s no secret that website and marketers’ privacy practices are top of mind for lawmakers, regulators, and class action lawyers alike. State, federal, and international authorities continue to pass privacy laws and regulations concerning what information may be collected, how it may be used, and how collection and use should be disclosed. The public too is sensitive to how their information is used by websites and marketers.  Instagram found this out the hard way last December when users revolted over a change that appeared to allow the site to sell users’ photos to advertisers. Instagram’s change even prompted a federal class action lawsuit—alleging, among other things, that the provisions of Instagram’s terms of use that allow commercial use of users’ photos were in violation of California’s Unfair Competition law.  This was recently dismissed from federal court on July 15th, but the lead plaintiff has since filed a similar class action lawsuit in California state court.

When designing a social media website or crafting a social ad campaign, remember the golden rule: tell consumers the truth about what personal information you are collecting from them and what you are going to do with it.  Sounds easy in theory, but in practice – how do you do that?

The starting point for compliance with privacy laws is the nature of your business.  Social media developers should ask: “What does my business do?” Marketers should ask: “What does my campaign do for this business?” Is the website a location-based service? Are we processing payment information from users?  Collecting personal information such as names and addresses?  What is the revenue model? Are we partnering with targeted advertisers?  A solid understanding of exactly what information you are collecting, for what purpose and where the data goes is key for the next, perhaps most critical step in privacy compliance—disclosure.

Disclosure is a key requirement for most all privacy laws—period.  Often, it’s okay that you’re collecting the data, regulators just want you to tell your visitors what it is you’re collecting and why.  This disclosure should typically come in a conspicuously posted privacy policy tailored to your website and its specific privacy practices (and no, copying and pasting a policy you found on Google won’t cut it). While there are many practices that could be covered in a privacy policy, a few of the key areas applicable to most websites, apps and the campaigns that use them include:

  • Data Collection Practices—Regulators and consumers want to know what information you’re collecting.  Be upfront with your customers and clients.  Even if you’re just keeping track of the IP address locations of visitors, this should go in your privacy policy.  The more sensitive the information you collect, such as addresses, credit cards numbers, or telephone numbers, the more your customers (and regulators) are going to want to know you’re using it responsibly.
  • Cookie Practices—The use of cookies, “pixel tags”, “web bugs”, and other technology that tracks users’ web activity has been the subject of much scrutiny.  If a website uses cookies, even something as simple as a Google Analytics cookie, this should be disclosed.  Transparency is key and misleading consumers on cookie practices can be costly. For instance, in 2012 Google settled with the FTC for $22.5 million after failing to adequately disclose its cookie practices.
  • Third-Party Data Sharing—Not only is it important to disclose what you collect, but you should disclose what you do with it—particularly those you share customer data with. This is especially true if information is being shared for advertising purposes, even just anonymous aggregate data about your website’s traffic.
  • COPPA—Of the many laws with very specific privacy requirements, one particular law social media websites and online marketers should be aware of and that is very frequently mentioned in the media is the “Children’s Online Privacy Protection Act of 1998” or COPPA. COPPA has stringent requirements that must be adhered to for websites geared towards children, including specific language that should be included in a privacy policy and rules on what information may be collected. Rules that came into effect July 1st will make these requirements even more burdensome. If you are charged with running a social media marketing campaign directed towards kids, this is probably one of the times when it’s a good idea to bring in legal and make sure you’ve got your privacy practices in good order.
  • Mobile Data Privacy—Marketers and social media websites should especially be aware of increased privacy regulations and enforcement in the mobile sphere.  For instance, the FTC recently released in February 2013 a staff report recommending ways in which mobile marketplace players can better inform consumers about their data practices. More pointedly, California’s Attorney General recently sent about one hundred letters to mobile app developers—threatening to impose $2500 per download fines under California law for not having a policy displayed.

Privacy is a constantly changing area of the law.  For instance, just this July 1st, a leading group of international privacy experts, the International Working Group on Data Protection in Telecommunications, recommended the implementation of a universal do-not-track default setting for internet browsers. Just a couple weeks after this recommendation, another influential group of privacy experts, the Tracking Protection Working Group (who have now been working for two years on a universal “Do Not Track Standard”), reached a consensus that web users should at least be able to opt out of any targeted advertising based on their browsing activities and that advertising websites should be required to honor that rule.  With potentially sweeping changes such as these being proposed on several fronts, online marketers and advertisers – now more than ever – should keep informed of privacy law and how it may affect their campaigns.

Co-author of this post is Alan M. Pate, an associate in the New York office of BakerHostetler.

DISCLAIMER: This article does not constitute legal advice and because of its general nature the information provided may not be applicable in many situations and should not be acted upon without specific legal advice based on particular facts and circumstances.