September 08, 2011 Articles

Suing over Data Privacy and Behavioral Advertising

Data-privacy suits may be viewed as a cost of doing business in a digital economy. How a company responds may determine how many more suits get brought against it.

By Ian C. Ballon and Wendy Mantell

Some class-action plaintiffs’ lawyers have begun filing a new kind of putative class-action lawsuit focused on behavioral advertising and data privacy that typically draws media attention but involves little or no damage or injury. Since 2010, following the settlement of two high-profile, multimillion-dollar, putative, Internet-based, privacy class-action suits prior to the defendants even being served, more than 150 data-privacy, putative class-action suits have been filed focusing on the disclosure of information through the use of social networks, behavioral advertising, mobile-phone applications, and other Web 2.0 technologies; credit-card transactions involving the collection of zip codes from California residents; and cloud computing applications. Some people believe these lawsuits have settlement value because of the willingness of reporters to publicize allegations about Internet privacy, regardless of whether the allegations are true, and almost anything related to consumer use of technology. The Wall Street Journal’s somewhat sensationalized series on alleged privacy “violations” stemming from the use of social networks and mobile applications, in combination with rumblings by the Federal Trade Commission (FTC) and Congress about the need for even greater regulation, have spurred these class-action lawyers to take action. Perhaps not surprisingly, suits based on statements by politicians about the need for additional legislation do not fit well into claims based on existing statutes. Data-privacy, putative class-action suits are generally premised on the thinnest of legal reeds that will rarely survive motions for summary judgment, if they survive motions to dismiss or class certification.

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