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LinkedIn Lawsuit: Courts Catching Up with Tech

LinkedIn Lawsuit: Courts Catching Up with Tech

This LinkedIn case shows how email campaigns can lead to a lawsuit. Here's how IT contractors can manage their data collection and marketing liability.

Friday, June 27, 2014/Categories: cyber-liability

Insurance Journal reports that tech companies may be on the hook for more lawsuits as a federal judge ruled that LinkedIn can be sued for its email and data collection policies. A lawsuit against a major tech company might not seem relevant for a small IT contractor, but it's important to keep tabs on changing tech liability.

The tech industry is still relatively new, especially in the eyes of the law. Because judges will rule based on past cases, new rulings (like the one in the LinkedIn case) can actually change what you can be sued for. So what did LinkedIn do wrong?

Website Agreements: No One Reads 'Em, But You Can Be Sued for 'Em

Many consumers simply click through the terms of use, privacy policies, and other user agreements on websites they use. And many sites forget to update these agreements as they change their data collection policies. (For a sample Privacy Policy, see our free IT contract templates.)

A group of LinkedIn customers sued the company after it sent multiple solicitations to email addresses in the users' contact lists. Here's the thing: these users agreed to let LinkedIn use their contact list, but they didn't agree to letting the company send more than one email.

Users filed a lawsuit saying that by sending their contacts multiple emails, it made the users seem like the kind of clueless Internet users that spam their friends and associates with unwanted email. Apparently a little spam is okay, but two or more messages is just too much.

What the LinkedIn Lawsuit Means for Small Business IT Liability

For IT contractors, data mining businesses, and web app designers, there are three takeaways:

  1. Be careful with user agreements. Even exceeding the agreed limits of your data collection or email campaigns slightly could lead to a class action lawsuit.
  2. Make sure you check your clients’ user agreements if you’re working on a web app or managing their data to make sure you're not doing something that violates those terms (and exposes you and your clients to a lawsuit).
  3. There's very little case law on your side in an IT lawsuit. Judges don't have technical backgrounds. Often, the way business is conducted on the web can leave IT companies exposed to risk. The gray areas of big data marketing and data collection could lead to lawsuits filed against your business.

What Insurance Protects You from Data Lawsuits?

Data collection liability – the risks that can lead to lawsuits – is more complicated than you'd think. LinkedIn's case highlights how important it is to be clear and accurate in your user agreements, but there are all sorts of ways you can get stuck in a lawsuit.

Data breaches, data loss, and misuse of data can all lead to an IT contractor getting sued by a client.

Earlier this year, we profiled how universities sued Google after it incorporated their user data into its algorithm. The educators claimed their user agreements specified that university data wouldn't be used for marketing. The judge ruled that Google's general search algorithms technically were marketing and ruled in favor of the universities. (See "The Face of E&O for Data Miners" for the full scoop on this and other data lawsuits.)

These lawsuits should illustrate just how unclear data liability is. And they show just how easily a judge could rule against your company for the way you store or use customer data.

What IT insurance covers data liabilities? Errors and Omissions Insurance protects your business when a client sues you over data errors, mistakes, or other professional liabilities. E&O coverage pays for your lawyers’ fees, settlements, damages you owe clients, and other costs related to a data liability lawsuit.

For more on this coverage (and the cost of IT insurance for small businesses), see our sample E&O Insurance quotes.

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