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B2B DIRECT MARKETING
A new front opened this spring in the ongoing fight between Internet privacy advocates and advertisers that rely on data collected about Web users.
In April, U.S. District Court Judge James Holderman certified the Internet privacy case Harris v. comScore Inc. as a class action suit. The suit centers on comScore's practice of bundling its monitoring software into third-party downloads such as free screen savers. The plaintiffs, Jeff Dunstan and Mike Harris, allege that comScore didn't provide adequate notice that when they downloaded free third-party software they were also downloading a comScore software package that monitored their email and browser histories, and sent that information to comScore, which in turn sold it to advertisers.
By certifying the suit as a class action, Judge Holderman agreed that Harris and Dunstan weren't alone in a potential invasion of privacy caused by comScore's actions. Indeed, the number of people who downloaded a similar software bundle offered by a comScore affiliate exceeds 1 million people, the plaintiffs' attorneys said in their presentation to the court.
While Internet privacy advocates cheered the class action certification, industry trade groups, including the Direct Marketing Association, reacted warily.
“We felt the court made it too easy to certify a class action and we believe they did not go through all the requirements in creating the class,” said Jerry Cerasale, senior VP-government affairs at the DMA. “If this became precedent, it would make it easier for plaintiffs to get certified as a class action.”
The DMA hasn't taken a position on the merits of the case itself, Cerasale said. Instead, the trade group has so far limited its opposition to the class action certification.
“From a lawyer's point of view, the only way to get a significant amount of money in a case like this is to get a lot of members in a class action,” Cersale said. “That's our fear. We want to protect our members from a barrage of class action privacy suits, which can be very costly.”
Ben Thomassen, an associate attorney with Edelson, the law firm representing the plaintiffs in the comScore case, said he doesn't see it that way.
When it comes to Internet privacy, there likely is no easy resolution. Internet advertisers rely on increasingly sophisticated data to deliver effective advertising. According to Interactive Advertising Bureau, Internet advertising revenue totaled $36.57 billion in 2012, a 15% increase over the year before.
Yet as online advertising has grown, so have privacy concerns—and that's where industry groups begin to worry. Currently, Cersale said, there is no pending federal legislation that would limit advertising through consumer privacy measures, which is why the DMA is monitoring lawsuits such as Harris v. comScore Inc. so closely.
“Class actions like this one can have the same effect as government regulation,” he said. “Especially in the privacy area, these lawsuits can be the most effective way to curb the industry.”
As evidence, Cerasale offered up the case against Williams-Sonoma Inc. in California, where in 2011 the California Supreme Court ruled that retailers couldn't force customers to give up their ZIP codes during credit card transactions. The case was brought against the retailer by a consumer who alleged that Williams-Sonoma used her name and ZIP code to get her address and begin sending her direct marketing pieces. After that ruling in California, privacy advocates last month filed a similar class action suit against Guitar Center in U.S. Distirct Court for the District of Massachusetts.
Geo-location on mobile devices is another potential hot-button privacy issue, Cerasale said. The technology is already available to offer consumers deals based on geo-location software—but privacy advocates worry that advertisers' routinely tracking mobile phone and tablet users represents an unwanted intrusion into their personal lives.
“There are usually no real damages in cases like this,” Cerasale said. “You can't figure out the costs.”