No Mercy: SEC charges rapper T.I. over cryptocurrency scam

No Mercy: SEC charges rapper T.I. over cryptocurrency scam

It would seem T.I. left a paper trail. 

The Securities and Exchange Commission (SEC) on Friday announced charges against the 39-year-old rapper, real name Clifford Joseph Harris, for his alleged role in promoting a fraudulent initial coin offering. Harris, the SEC claims, sold cryptocurrency tokens via his Twitter account and encouraged his followers to invest in the 2017 FLiK ICO — all the while falsely claiming to be a part owner. 

According to the SEC, the ICO was (surprise!) essentially a scam run by film producer Ryan Felton. Felton promised to build “Netflix on the blockchain” (LOL), but never delivered. Instead, Felton allegedly used money from FLiK ICO investors to drive up the price of a second token, SPARK, which Felton also controlled.  Read more…

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Adtech scores a pandemic pause from UK privacy oversight

The coronavirus is proving to have an unexpected upside for the adtech industry.

The UK’s data protection agency has paused an investigation into the industry’s processing of Internet users’ personal data, saying targeted suspension of privacy oversight is merited because of disruption to businesses as a result of the COVID-19 pandemic.

The investigation into adtech industry practices by the Information Commissioner’s Office (ICO) is linked to a 2018 complaint it received about systematic, massive scale, high velocity personal data trading associated with the real-time bidding component of programmatic advertising.

A series of complaints have since been filed over the issue across the EU that assert it amounts to “the most massive leakage of personal data recorded so far”.

The first of these complaints was lodged in the UK with the ICO but the complainants are still waiting for any relief.

And now their wait goes on…

One of the complainants, Brave’s Dr Johnny Ryan, described the regulatory inaction over a period of some two years since he sounded the alarm to the watchdog as “astounding”.

“They’ve failed to use any of their powers. Even their powers of investigation,” Ryan told TechCrunch. “We’re not even talking about enforcement. They’ve failed to ask their questions using their strong voice. The lack of action — it’s actually really hard to remember just how little action there is — it’s quite astounding, just how vacuous this vacuum is. How much of a pause this was a pause of.

“That’s astounding,” he added. “I claim it’s the biggest data breach the UK has ever had — but I’ve never had anyone contradict that. It’s almost indisputable because the figures are so big. So we’ve got this enormous breach, and… it’s continuing — so it’s not some discrete thing that’s now over… The harm accumulates. So this is a problem. It’s a breach pandemic!”

We also contacted the ICO with questions about the decision to suspend the adtech investigation — including asking how UK citizens can be confident their data rights are being defended against abuse by powerful industry platforms.

The regulator did not engage with what we asked — instead sending this generic statement:

The ICO recently set out its regulatory approach during the COVID-19 pandemic, where we spoke about reassessing our priorities and resources.

Taking this into account we have made the decision to pause our investigation into real time bidding and the Adtech industry.

It is not our intention to put undue pressure on any industry at this time but our concerns about Adtech remain and we aim to restart our work in the coming months, when the time is right.

This is by no means the first ‘breather’ the regulator has offered the adtech industry vis-a-vis this complaint.

In fact there have been a series of ‘warnings’ — followed by a series of periods of, er, mildly worded blog posts. (See here, here and here.) Enforcement? Not a sniff.

Europe’s General Data Protection Regulation (GDPR), meanwhile, will turn two later later this month — meaning it’ll be two years since the updated framework was supposed to start to apply.

Many privacy experts and campaigners are questioning the quality and quantity of enforcement set along alongside the flagship update to legal safeguards for citizens’ data — which actually date all the way back to 1995.

Brave Ryan said the ICO’s regulatory abdication does not reflect well on the success of the wider EU data protection regime — pointing out that the UK watchdog is the best resourced of the bloc’s (post-Brexit) 27 Member States (the UK remains in the EU until the end of the Brexit transition period, so is still technically a member right now).

“If the EU’s biggest regulator in this domain — which is one of the jewels in the EU’s regulatory crown — its biggest and most well resourced, in terms of cash, regulators is unable to enforce against the biggest data protection infringement that the country it regulates for has ever experienced is the GDPR just a kind of collective hallucination?” he said. “Or is that something that is limited to the UK?”

A bigger issue he points to is that the UK, post-Brexit, will need to request a data protection ‘adequacy agreement’ from the European Commission if it wishes for its businesses to be able to freely exchange data with EU businesses as they can now.

“When the UK requests that the European Commission consider the UK as a safe and adequate third country where personal data from the EU can freely flow, one of the questions to be considered is do you have a regulator that can protect this personal data? And the answer today is no,” said Ryan. “No, you do not have a regulator that is able to protect personal data of European citizens.”

“This [ICO inaction] should have a post-Brexit implication — which will affect so many sectors of the UK economy,” he warned.

Ryan’s employer, Brave — which makes a pro-privacy web browser — recently lodged a complaint with the European Commission against EU Member States, producing a report and accusing governments of under-resourcing their data protection agencies. It has asked the Commission to launch an infringement procedure.

“How is only 3% of the [ICO] staff mainly focused on digital issues?” Ryan added. “Clearly more than 3% of infringement is digital and more than 3% of life is — so unless the ICO is labouring under the misapprehension that we are at the beginning of this digital transition they are the wrong regulator for this decade. This is last century’s regulator. So there’s a huge management problem inside the ICO. It seems they are unwilling or unable to regulate digital issues… They need to get fit for purpose.

“They are still living in a print based world. And we are confronting them urgently with problems that are not print based — but that affect every aspect of our lives. Including, apparently, the last election. And presumably the next one too… So this is shocking on many, many levels.”

As a consequence of Brexit, UK citizens should expect the ICO to be their sole data protection rights enforcer, rather than — as can be the case now — other EU regulators being involved in defending their rights, such as in the case of major tech platforms which often locate themselves under a legal jurisdiction elsewhere in the EU.

Google, for example, has said it will relocate UK users to a US jurisdiction in response to Brexit.

UK watchdog sets out “age appropriate” design code for online services to keep kids’ privacy safe

The UK’s data protection watchdog has today published a set of design standards for Internet services which are intended to help protect the privacy of children online.

The Information Commissioner’s Office (ICO) has been working on the Age Appropriate Design Code since the 2018 update of domestic data protection law — as part of a government push to create ‘world-leading’ standards for children when they’re online.

UK lawmakers have grown increasingly concerned about the ‘datafication’ of children when they go online and may be too young to legally consent to being tracked and profiled under existing European data protection law.

The ICO’s code is comprised of 15 standards of what it calls “age appropriate design” — which the regulator says reflects a “risk-based approach”, including stipulating that setting should be set by default to ‘high privacy’; that only the minimum amount of data needed to provide the service should be collected and retained; and that children’s data should not be shared unless there’s a reason to do so that’s in their best interests.

Profiling should also be off by default. While the code also takes aim at dark pattern UI designs that seek to manipulate user actions against their own interests, saying “nudge techniques” should not be used to “lead or encourage children to provide unnecessary personal data or weaken or turn off their privacy protections”.

“The focus is on providing default settings which ensures that children have the best possible access to online services whilst minimising data collection and use, by default,” the regulator writes in an executive summary.

While the age appropriate design code is focused on protecting children it is applies to a very broad range of online services — with the regulator noting that “the majority of online services that children use are covered” and also stipulating “this code applies if children are likely to use your service” [emphasis ours].

This means it could be applied to anything from games, to social media platforms to fitness apps to educational websites and on-demand streaming services — if they’re available to UK users.

“We consider that for a service to be ‘likely’ to be accessed [by children], the possibility of this happening needs to be more probable than not. This recognises the intention of Parliament to cover services that children use in reality, but does not extend the definition to cover all services that children could possibly access,” the ICO adds.

Here are the 15 standards in full as the regulator describes them:

  1. Best interests of the child: The best interests of the child should be a primary consideration when you design and develop online services likely to be accessed by a child.
  2. Data protection impact assessments: Undertake a DPIA to assess and mitigate risks to the rights and freedoms of children who are likely to access your service, which arise from your data processing. Take into account differing ages, capacities and development needs and ensure that your DPIA builds in compliance
    with this code.
  3. Age appropriate application: Take a risk-based approach to recognising the age of individual users and ensure you effectively apply the standards in this code to child users. Either establish age with a level of certainty that is appropriate to the risks to the rights and freedoms of children that arise from your data processing, or apply the standards in this code to all your users instead.
  4. Transparency: The privacy information you provide to users, and other published terms, policies and community standards, must be concise, prominent and in clear language suited to the age of the child. Provide additional specific ‘bite-sized’ explanations about how you use personal data at the point that use is activated.
  5. Detrimental use of data: Do not use children’s personal data in ways that have been shown to be detrimental to their wellbeing, or that go against industry codes of practice, other regulatory provisions or Government advice.
  6. Policies and community standards: Uphold your own published terms, policies and community standards (including but not limited to privacy policies, age restriction, behaviour rules and content policies).
  7. Default settings: Settings must be ‘high privacy’ by default (unless you can demonstrate a compelling reason for a different default setting, taking account of the best interests of the child).
  8. Data minimisation: Collect and retain only the minimum amount of personal data you need to provide the elements of your service in which a child is actively and knowingly engaged. Give children separate choices over which elements they wish to activate.
  9. Data sharing: Do not disclose children’s data unless you can demonstrate a compelling reason to do so, taking account of the best interests of the child.
  10. Geolocation: Switch geolocation options off by default (unless you can demonstrate a compelling reason for geolocation to be switched on by default, taking account of the best interests of the child). Provide an obvious sign for children when location tracking is active. Options which make a child’s location visible to others must default back to ‘off’ at the end of each session.
  11. Parental controls: If you provide parental controls, give the child age appropriate information about this. If your online service allows a parent or carer to monitor their child’s online activity or track their location, provide an obvious sign to the child when they are being monitored.
  12. Profiling: Switch options which use profiling ‘off’ by default (unless you can demonstrate a compelling reason for profiling to be on by default, taking account of the best interests of the child). Only allow profiling if you have appropriate measures in place to protect the child from any harmful effects (in particular, being fed content that is detrimental to their health or wellbeing).
  13. Nudge techniques: Do not use nudge techniques to lead or encourage children to provide unnecessary personal data or weaken or turn off their privacy protections.
  14. Connected toys and devices: If you provide a connected toy or device ensure you include effective tools to enable conformance to this code.
  15. Online tools: Provide prominent and accessible tools to help children exercise their data protection rights and report concerns.

The Age Appropriate Design Code also defines children as under the age of 18 — which offers a higher bar than current UK data protection law which, for example, puts only a 13-year-age limit for children to be legally able to give their consent to being tracked online.

So — assuming (very wildly) — that Internet services were to suddenly decide to follow the code to the letter, setting trackers off by default and not nudging users to weaken privacy-protecting defaults by manipulating them to give up more data, the code could — in theory — raise the level of privacy both children and adults typically get online.

However it’s not legally binding — so there’s a pretty fat chance of that.

Although the regulator does make a point of noting that the standards in the code are backed by existing data protection laws, which it does regulate and can legally enforceable — pointing out that it has powers to take action against law breakers including “tough sanctions” such as orders to stop processing data and fines of up to 4% of a company’s global turnover.

So, in a way, the regulator appears to be saying: ‘Are you feeling lucky data punk?’

Last April the UK government published a white paper setting out its proposals for regulating a range of online harms — including seeking to address concern about inappropriate material that’s available on the Internet being accessed by children.

The ICO’s Age Appropriate Design Code is intended to support that effort. So there’s also a chance that some of the same sorts of stipulations could be baked into the planned online harms bill.

“This is not, and will not be, ‘law’. It is just a code of practice,” said Neil Brown, an Internet, telecoms and tech lawyer at Decoded Legal, discussing the likely impact of the suggested standards. “It shows the direction of the ICO’s thinking, and its expectations, and the ICO has to have regard to it when it takes enforcement action but it’s not something with which an organisation needs to comply as such. They need to comply with the law, which is the GDPR [General Data Protection Regulation] and the DPA [Data Protection Act] 2018.

“The code of practice sits under the DPA 2018, so companies which are within the scope of that are likely to want to understand what it says. The DPA 2018 and the UK GDPR (the version of the GDPR which will be in place after Brexit) covers controllers established in the UK, as well as overseas controllers which target services to people in the UK or monitor the behaviour of people in the UK. Merely making a service available to people in the UK should not be sufficient.”

“Overall, this is consistent with the general direction of travel for online services, and the perception that more needs to be done to protect children online,” Brown also told us.

“Right now, online services should be working out how to comply with the GDPR, the ePrivacy rules, and any other applicable laws. The obligation to comply with those laws does not change because of today’s code of practice. Rather, the code of practice shows the ICO’s thinking on what compliance might look like (and, possibly, goldplates some of the requirements of the law too).”

Organizations that choose to take note of the code — and are in a position to be able to demonstrate they’ve followed its standards — stand a better chance of persuading the regulator they’ve complied with relevant privacy laws, per Brown.

“Conversely, if they want to say that they comply with the law but not with the code, that is (legally) possible, but might be more of a struggle in terms of engagement with the ICO,” he added.

Zooming back out, the government said last fall that it’s committed to publishing draft online harms legislation for pre-legislative scrutiny “at pace”.

But at the same time it dropped a controversial plan included in a 2017 piece of digital legislation which would have made age checks for accessing online pornography mandatory — saying it wanted to focus on a developing “the most comprehensive approach possible to protecting children”, i.e. via the online harms bill.

How comprehensive the touted ‘child protections’ will end up being remains to be seen.

Brown suggested age verification could come through as a “general requirement”, given the age verification component of the Digital Economy Act 2017 was dropped — and “the government has said that these will be swept up in the broader online harms piece”.

It has also been consulting with tech companies on possible ways to implement age verification online.

The difficulties of regulating perpetually iterating Internet services — many of which are also operated by companies based outside the UK — have been writ large for years. (And are mired in geopolitics.)

While the enforcement of existing European digital privacy laws remains, to put it politely, a work in progress