THIS ISSUE'S HEADLINES

How Will COVID-19 Tracking Apps Affect Privacy?

Primer on Asset vs. Stock Purchase When Buying or Selling a Business

Influencer Marketing Expansion Attracts Federal Regulators

Keeping Up with COVID-19 Issues, Insights and Analysis


HOW WILL COVID-19 TRACKING APPS AFFECT PRIVACY?
(This article by PLDO Partner Brian J. Lamoureux was published in the Providence Journal on May 18, 2020.)

America is grappling with a compelling question during the coronavirus pandemic: should we allow Big Tech and the government to use our smartphones to track our movements, body temperature, and activities to slow the infection rate?

As explained by the wonderful documentary "Terms and Conditions May Apply," history provides some guidance here. Twenty years ago, a little-known web-based toy company called Toysmart.com filed bankruptcy. Toysmart proposed to sell its customer list as part of its bankruptcy process. This request implicated serious privacy concerns as Toysmart had promised its customers that it would never sell or disclose their information. Understandably, however, Toysmart’s creditors viewed the customer list as a valuable asset that should be sold to satisfy their claims.

After much public outcry (including an enforcement action by the Federal Trade Commission against Toysmart), Toysmart was allowed to sell its customer list. This resulted in tremendous outrage among privacy advocates, and spurred Congress into action. Congress immediately proposed a comprehensive online privacy bill called “The Online Privacy Protection Act of 2001.” This bill would have made it illegal for a website to “collect, use, or disclose personal information concerning” individuals in violation of rules to be set by the Federal Trade Commission. It would have also required websites to keep personal information confidential and secure. (click here to continue reading)

If you have questions or would like more information on this topic or other business, employment or digital media and data protection issues, please contact Attorney Lamoureux at 401-824-5155 or email bjl@pldolaw.com.

[back to top]

PRIMER ON ASSET VS. STOCK PURCHASE WHEN BUYING OR SELLING A BUSINESS

The market for buying and selling businesses is somewhat following the trend of what occurs when buying and selling real estate in terms of all the considerations each party must weigh at the timing of the transaction. Prior to making a decision to buy or sell a business, a period of due diligence should reveal pitfalls and challenges if the process is completed in a comprehensive manner. The process begins with formulating an offer in the form of a term sheet or letter of intent, which outlines the proposed purchase price and conditions of the transaction. This document, when executed, becomes the blue print for the proposed deal.

Once the parties to the transaction have agree upon the terms to be included in the term sheet or letter of intent, the seller and buyer have a decision to make as it relates to the structure of the transaction; i.e., buying and selling assets or stock. And each party to the transaction will have different reasons for preferring one structure over another in order to protect their interests. choosing the structure of an acquisition also requires careful tax analysis, as well as a solid understanding of the benefits and consequences of each type of transaction.

In his latest business advisory, PLDO Managing Principal Gary R. Pannone provides an in-depth review of an asset purchase vs. a stock purchase and highlights considerations the parties to the transaction should examine to fully understand the benefits and consequences of each type of transaction, including tax implications. To read the advisory, please click on Primer on Asset Purchase vs. Stock Purchase When Buying or Selling a Business. For more information about business strategies and legal issues, please contact Attorney Pannone at 401-824-5100 or email gpannone@pldolaw.com.

[back to top]

The “influencer” marketing industry, which is predicted to become a $15 billion industry by 2022, is rapidly expanding, and with COVID-19 ramping up e-commerce, brands are increasingly turning to this marketing strategy. Influencers are people with varying amounts of online followers who promote and advertise products and services on YouTube, Twitter, Facebook, Snap Chat, Instagram, TikTok and blogs. Influencers can be celebrities, industry experts, or everyday people who have built a reputation for being knowledgeable on a specific topic. A successful influencer generates a large following of engaged people who trust and pay close attention to the influencer’s views and recommendations.

Businesses that utilize influencer marketing should be cautious of the legal risks. Consumer protection regulators, including the Federal Trade Commission (the “FTC”) and more recently the Food and Drug Administration (the “FDA”), are targeting deceptive influencer practices that could mislead consumers. Brands, media outlets, and influencers are legally obligated to disclose any social media post that was created from “material connections” between a brand and an influencer, and can all be held liable if the law is not observed. The FTC has stated that “material connections” could include a paycheck or gift in exchange for an endorsement, a family connection to a company, or an ownership stake in the company. Despite the requirements for disclosures on social media posts, many posts and influencers continue to not properly disclose.

To decrease the legal risks of influencer marketing, a business should consider implementing these practices:

• Develop an influencer contract or terms of service which address the contractual terms necessary to properly create an influencer marketing campaign;
  
  
• Monitor the continuous regulatory developments to ensure your business and influencers are complying with applicable law;
  
  
• Provide your influencers with a set of guidelines as to what they must disclose and how they should disclose “material connections”; and
  
  
• Develop active monitoring programs that monitor your influencers and vendors.

If you have questions about your organization’s influencer marketing policy and related legal issues, call Attorney Katherine D. Bishop at 401-824-5100 or email kbishop@pldolaw.com.

[back to top]

The Coronavirus pandemic changed how many of us operate our businesses and our daily lives.Like you, the attorneys and staff at PLDO are committed to doing our part in containing and mitigating exposure to COVID-19 for our colleagues, clients and community during these unprecedented times. To help keep people abreast of legal issues that have arisen as a result of new legislative actions, PLDO’s teams of employment, business and estate and tax attorneys have provided multiple webinars, e-news alerts and advisories. To access our library of information, please visit PLDO COVID-19 Resources and do not hesitate to contact your PLDO attorney directly in our Rhode Island, Massachusetts or Florida offices or call our toll free number at 866-353-3310 to discuss your legal matter.

[back to top]