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By Sam Pfeifle
Publications Director

Each year at the Privacy Law Scholars Conference, organized by the UC Berkeley School of Law and the George Washington University (GWU) School of Law, scholars submit papers that are in progress, to be workshopped with a facilitated discussion amongst attendees. The idea is to bring together the academic privacy community with those working in industry, advocacy, law and government to further privacy thought leadership and facilitate dialogue.

As part of the event, the IAPP awards the two papers that receive the most votes from attendees with a cash prize and a speaking slot at the IAPP Privacy Academy, to be held this year in Seattle, WA, Sept. 30 through Oct. 2. This year, the winners were Ryan Calo, assistant professor at the University of Washington School of Law, and a paper co-written by Dan Solove, professor of law at GWU School of Law, and Woodrow Hartzog, assistant professor at Samford University’s Cumberland School of Law. (To read about last year's winners, click here.)

Both papers are still in draft form, but ought to be posted later this summer on SSRN.

Calo’s paper, “Digital Market Manipulation,” combines his background in technology study with his interests in privacy, developed in part working under Erin Egan—now Facebooko CPO—at Covington & Burling after he left law school.

The paper uses as a starting point work done in the 1990s on the phenomenon of market manipulation, where companies use known consumer limitations against them to increase sales and revenues. The most obvious example might be the phenomenon of pricing products at $9.99 and the like. This exploits consumer “price blindness” that makes them feel the product is significantly cheaper than it is.

“Most people don’t think that’s particularly harmful,” Calo said, in an interview with The Privacy Advisor, “but more pernicious is the bid-to-auction practice.” For example, an iPad might be auctioned off on a website, but every time you bid, you have to pay a small fee. While one customer is rewarded with an under-priced iPad, everyone else paid money to receive nothing.

“That leverages a bunch of known cognitive biases,” Calo said, “and you believe disproportionately that you’ll benefit when you won’t.”

What Calo is now exploring is how this digital market manipulation is playing itself out in privacy and how companies can be better actors. “My project talks about how the leveraging of consumer bias is made greater by contemporary sales techniques and technology,” including those technologies that can track consumer behavior.

While the standard idea is that this technology is used to make sure a soccer player sees ads for soccer balls instead of tennis balls, “the way they’re really using that information,” Calo said, “is to take any given ad and subtly change the content to make it more likely that you’ll buy it. It’s called persuasion profiling.”

The paper compiles a number of examples of how this can be more and less pernicious. “I’m not taking aim at any certain company,” Calo said, “but I’m saying there’s a limit and we’re to maybe reach that limit, and when we do, what should we do?”

“I conclude that we should radically change the incentives,” he said. “They should make a better product rather than mask downsides to the service.”

One organization tasked with watching these kinds of deceptive practices is the FTC, and it is the subject of Solove’s and Hartzog’s paper. The two have been in close contact since Hartzog was a student of Solove’s, and this is the first in a series of papers the two have planned to write together.

Called “The FTC and the New Common Law of Privacy,” the paper looks at the entire body of the FTC’s privacy settlements and guidance and argues that the Common Law it has created is actually much more consistent and understandable than most people realize.

“The FTC is one of the most dominant agencies when it comes to regulating privacy,” said Solove—who also heads up Teach Privacy, a privacy training firm—in an interview with The Privacy Advisor, “and it has oddly not been analyzed in a very sustained academic way, so there’s a lot of scholarship on other areas of privacy law, but very few have delved deeply into the FTC and what it’s been doing for the last 15 years or so.”

He said the sample size is now large enough, some 150 cases, that “we do have a body of law that is at least meaty enough that it gives us some degree of guidance, and there are overlapping issues, so you can see some trends. It’s not a huge body of law, but it’s definitely enough cases to start to really draw some conclusions.”

Solove and Hartzog, who is also an affiliate scholar at the Center for Internet & Society at Stanford Law School, identify standards that have evolved, the direction the FTC has taken and even come to conclusions on where the law will go from here. “Originally, the FTC was really about what you promised, but they’ve moved away from that…It’s going beyond the four corners of the privacy policy…We look at that and where this law could go.”

For example, Solove said, the privacy world is a lot more standardized than it was when the FTC first started privacy-related enforcement. Consumers now have expectations and the profession of privacy has evolved such that you can now be deceptive even if you’re stating clearly what you’re doing. Consumers “have basic expectations about how they’ll be treated,” he said, “and then when something unexpected is slipped in, there needs to be some special notice.” Just as you can’t slip in an absurd provision into a standard mortgage agreement that promises a first-born if payments aren’t met, so, too, are there now provisions about data collection you can’t just slip into a 2,000-word privacy notice on your website, Solove believes.

“The FTC can push more in that direction,” he said, along with a number of others outlined in the paper. 

“We’ve seen the professionalization of this field,” Solove said, “and we know now some of the basic good privacy practices…When people aren’t doing those things, it could be very well justified under the FTC’s authority to say, ‘Hey, wait a second, everyone is doing these bare minimums and by not doing them, you’re acting in an unfair manner.’”

Read More By Sam Pfeifle:
Privacy in Popular Culture: Dressing To Beat Big Brother
The Privacy (and Security) Pro in the White House
Harris To Step Down at CDT, Looks To Continue Global Growth, Legislative Progress
First PCLOB Meeting’s Ideas for USA PATRIOT Act; FISA Improvements May Affect Interaction with Private Industry


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