The Consequences of Artificially Inflating Your Social Currency [e263]

April 6, 2016

Nasir and Matt discuss various lawsuits against social media platforms in which users are accused of artificially inflating their social currency.

Full Podcast Transcript

NASIR: Welcome to our podcast where we cover business in the news and add our legal twist.
My name is Nasir Pasha.

MATT: And I’m Matt Staub.

NASIR: Do you ever just think about how, like, we do a podcast and, in a way, it’s really weird because we’re attorneys and we spend our time on Thursday nights recording a podcast. I mean, I have a great time but, when I start looking at it from a third person’s perspective, I’m just like, “What are we doing?” but I love it.

MATT: Yeah. Well, I mean, it’s only – and I guess it’s technically evening for me – it’s early evening. For you, it’s a little bit later.

NASIR: Yeah, 7 o’clock.

MATT: People don’t really want to listen to attorneys for the most part.

NASIR: Yeah, exactly. But people have been listening. We have a nice little following now. I mean, it’s pretty neat, you know?

MATT: It’s a lot to live up to.

NASIR: That’s true.

MATT: Are you sure that we haven’t been artificially inflating our listener counts?

NASIR: No, we have, for sure. I mean, I’m saying the number of fake listeners we have is just enormous. It’s in the trillions, actually.

MATT: I bring that up because that’s what we’re going to talk about today. You could count that as social currency, couldn’t you?

NASIR: Absolutely, yeah.

MATT: It’s a pretty broad definition of what social currency is. I don’t think there’s any definite things that fall under it but that’s what we’re going to talk about today – social currency.
It raises a lot of interesting questions because I’m sure – well, we know for sure because it’s happened to the firm before with artificially inflating not necessarily view counts or things like that or times someone’s viewed a video.

NASIR: But definitely manipulation, right?

MATT: Yeah, it was voting, right? When we ran that photo competition.

NASIR: We’ve got to tell that. Because it happened so long ago, most people probably don’t know the story. I’ll give you the 30-second version which will probably be a two-minute version but, anyway, it was a really cool idea. We had these – I don’t know what they are – these little piggy banks and we gave them out at events and we had a contest. Basically, take this piggy bank and take a photo with it and make it interesting. Matt’s holding it up. No one else can see it, by the way. We’re not on TV, by the way, Matt, just so you know. And so, we gave them out and the idea was, okay, take a photo with our piggy bank with our logo on it and make it interesting and then post it on our Facebook page and we’ll do an open voting and whoever gets the most votes will get an iPad. Of course, we get a lot of photos but they’d email it to us. They don’t follow the rules and all the stuff like that. We’d get a good number of submissions. By the way – correct me, Matt, if I’m ruining the story because I forget the details but one of the persons got like 100 more votes than everyone else.

MATT: It was like immediate, too.

NASIR: Yeah, within a day or so. It’s like, “Okay, maybe he got his friends to do it.” But then, we started looking at the actual people that were voting and it was obvious – basically all of them were from the same country and it was like either the Philippines or Indonesia or something like that and there was exactly 100 of them. Then we’re like, “Wait a minute. We’re familiar with the fact that you can just buy social media likes and things like that online.” Of course, you can do the same thing. You can buy people to vote for you online as well and that’s exactly what happened. This person basically cheated himself to get an iPad. Of course, we didn’t give him one but we were so pissed off about it that we literally blacklisted him in our CRM software. Remember that? Because I was like, “Whoever this guy is, we’re not dealing with him,” but anyway.

MATT: I think you were just upset. I was just indifferent to the situation.

NASIR: No, Matt was the most upset. In fact, I didn’t care. I actually wanted to give him the iPad. I was like, “That was so clever and ingenious that we should reward him for his intelligence.”

MATT: I mean, that’s a topic for another day and I don’t know if we’ve ever gone into detail about there’s pretty strict rules for contests and sweepstakes and things like that. Check out the site – the Pasha Law site. I know you did a good posting on that, I believe, at some point.

NASIR: Yeah, I don’t know if it’s a little dated but, yeah, most of it’s probably still applicable.

MATT: But, yeah, good lead-in.
So, we have this social currency and I don’t think we’re going to talk about any instances of something along those lines. A lot of these deal with the various social media platforms and, you know, instead of a video that should only get 1,000 views, it gets 100,000 views or you can prorate that out and is even more so. But there’s a few cases against YouTube, against Google, against Facebook of various people that have brought these lawsuits against these social media platforms for various reasons because it all deals with this. Obviously, these people that are building up their social currency, you know, that’s their value right there. If you have an instance – YouTube, for example – deletes your account or suspends your account or removes a video or relocates it so your view count is back down to zero, that’s a big deal for these people that essentially make their living off of these social media platforms.

NASIR: Yeah. Literally, people will pay – and business owners know this – if you want to promote a product with a celebrity or some sort – even a B- or C-list celebrity – one of the key things you’re going to need to look at is how many followers they have, how many likes they have, whether you’re launching a product and getting it to a third-party supplier or distribution channel or you’re launching a film project – whatever it is, these statistics actually matter. And so, if it’s fake, then obviously, you know, YouTube and these other social media channels has a vested interest to make sure that you’re not manipulating the data.

MATT: Have you heard of…?

NASIR: Yes.

MATT: Darnaa? Darnaa with two A’s at the end?

NASIR: No, I’m familiar with the case because I’m prepared for today.

MATT: Me, too.

NASIR: But, before today, no.

MATT: Yeah, I haven’ heard of her either but I am also familiar with the case.
Basically, she had a video that she put up on YouTube, I assume.

NASIR: Yeah, YouTube.

MATT: She had this music video she put up and there were allegations that she inflated her view count through some mechanism. What YouTube did was removed the video and relocated it so her view count then got bumped down.

NASIR: Can we pause there for a second?
So, Google – who owns YouTube, of course – they made an assessment that somehow there was some data manipulation or view count manipulation. I think this is important. Just as we talked about in the Facebook contest example, people pay services or they’ll go through a company called Mechanical Turk that offers a certain amount of money for each person that does a specific act. It could be you get paid five cents to go to this page and watch a video. The problem with that from Google’s detection end is, if it’s legitimate users, then it’s kind of hard to tell – or I should say sometimes it’s hard to tell if it’s legitimate users or not – and so what they’ll look at is if it’s all from this particular IP address or if it all happened at once and they’re all directly linking from a certain page. There’s different algorithms and they’re not dumb. They find a way to detect, to distinguish, you know, because things go viral all the time. So, how are they going to detect whether or not this is a natural organic viral video that’s being shared versus someone who’s paying to manipulate the data?

MATT: Right. And so, that’s essentially what they said is, you know, “This is a violation of our terms of service. That’s why we’re going to remove the video and relocate it.” Logically, what does she do? Darnaa – hopefully I’m pronouncing that right – she sues the covenant of good faith and fair dealing, interference with respective economic advantage, defamation – I’m not sure the defamation claim – and injunction as well. The interesting thing, you know, this wasn’t just someone who was complaining, “Hey, I rely on this.” She had also alleged that she had built several large campaigns around this video costing a quarter of a million to $300,000.

NASIR: It actually says “several large campaigns each costing $250,000.” So, in theory, it’s close to a million dollars or so which is pretty crazy.

MATT: Yeah, so quite a bit of money. I like how the court kind of tackled this – that this was clearly an adhesion contract which, for the lay person, how would you describe it? Just a one-sided contract, basically? The terms of service?

NASIR: Yeah. I mean, it’s not only just one-sided but it also has to be, like, just because it’s a one-sided contract doesn’t mean that it’s an adhesion. It also has to be the manner of the contract – whether you have any kind of negotiating room.
In general, we like to consider that all terms of service for websites – especially large websites versus the small consumer – are going to be considered adhesion contracts in general. It’s a safe assumption, in other words.

MATT: Yeah, and the court came to a similar conclusion but they also said, “Well, it’s only slightly unconscionable.” Her claim doesn’t really hold weight. I mean, there was an appeal. One thing I should mention at this case, the biggest issue with her lawsuit here was she missed the time to file on time so she just screwed that up completely and she didn’t timely file the case so that was a whole overarching issue but I believe the court granted her a leave to amend so they kind of gave her a second chance and that’s when they, I think, got into this appellate appeals process saying the terms of service for Google, you know, they might be ambiguous in terms of relocating or removing the review and I think that’s ultimately what it came down to and I think that’s a common thing with a lot of these social media platforms – or really probably any terms of service, to be frank.

NASIR: Yeah, and one of the things the court said is that, “Look, this service is free of charge. Darnaa can post her music videos in another video service site,” and that’s arguable, right? It’s like, if you’re going to post a video, really, you only have two options now. Facebook now has its own video platform, pretty much, and they’re tried to independently or separate themselves from YouTube. And then, there are some others that are not unpopular but basically really do have a choice and that can be argued. But, because of that, YouTube can have broad discretion as to who uses its services and how you apply it – to an extent, to a limit – but I think that was a major factor in the court’s decision.

MATT: Right.

NASIR: Oh, and, also, on that filing timely issue, in the terms of service with YouTube, basically it says, if you need to file a lawsuit, you need to file within one year. It shows you, like, the importance of some of these terms in your contracts or terms of service, including whether you’re acquiring arbitration or waiving class action lawsuits which can be enforceable and non-enforceable depending, and then also limiting what’s called a statute of limitations to one year, so long as it’s a reasonable amount of time, you can’t make it one week, you can’t make it one month. So, one year in this case, even though it may have been an adhesion contract was not unconscionable, they enforced it. And so, you know, just a lesson from a terms of service side that, if you’re running a website with users.

MATT: It’s similar to… there was another case with another YouTube celebrity. YouTube removed her account – sorry – removed her account and they basically relied on YouTube ultimately ended up winning, going back to the terms of service again, looking at what was actually in there, and there was a provision in there in terms of limiting their liability and they disclaimed liability for any deletions or omissions of content. They basically covered themselves by saying, “Hey, we can do what we want. Tough break,” I guess. I’m sure there’s a bunch of different cases that have been similar

NASIR: It’s strange because, okay, these are obviously big companies that have a competent legal department that can write this stuff and even specialists in this area but even the court specified that YouTube’s terms of service were “inartfully drafted” yet they still unambiguously reserved the right to remove that content in its sole discretion. Again, it kind of shows you that, look, you don’t need fancy language or even a complex terms of service. What’s important here is that it needs to be unambiguous and, you know, in a plain language is even better, especially with an adhesion contract, so that it’s understood and so forth and fair. But, going back to our social media, it shows you that you are pretty much at the mercy of these companies. They have such broad discretion that, if your business model and marketing model is based upon the good will of YouTube, Twitter, you may want to make sure that you’re following the rules to the T so that there’s no ambiguity as to whether or not they’re going to remove your account.

MATT: Yeah, and that’s really what it boils down to for businesses. You know, my take on this – and this isn’t really a legal take – is as long as you’re doing everything in line with their terms of service or terms of use and all the rules that they might have on that media platform, you should be okay. I mean, as far as I know, Google or YouTube or Facebook isn’t going around and just deleting or removing content that isn’t in violation of what they have on their rules.

NASIR: Yeah.

MATT: So, as long as you’re following the rules that are provided, I would think you would be okay.

NASIR: Yeah, I think so and I’ve had some anecdotal experiences where, if you approach Facebook or Twitter on their customer service site which is very difficult to get on, but if you’re paying money, for example, and buying ads and so forth, you can get those contacts and run up the channel that, if you have a reasonable position, you can usually talk your way into it. In a sense, filing a lawsuit is probably the way that you’re not going to get a result because, once you file a lawsuit, it gets kind of publicized and now they have to fight you, unless they’re doing something really illegal because they have the defenses within their terms of service. Really, it’s about convincing them, like, “Look, yeah, accidentally, this marketing company paid for manipulating the ads. We didn’t know about them but we got rid of them. Can you reactivate our account?” Think about it. If they strictly apply these terms of service, then I as a third party can buy a bunch of people to manipulate your data and cause your account to be sabotaged and I could be a competitor, right? So, there are channels underground that you can actually go towards that don’t require an actual legal action.

MATT: Yeah. I mean, speaking to what you just said, there was another case that basically kind of came to the same terms of service there. YouTube unambiguously reserved the right to remove content in its sole discretion and discontinue, et cetera. They hold the power to do that. You’re agreeing to do it in the terms of service by using the site and, like you said, I guess now there are ways to pay for – is it the YouTube Red? Is that still going on? I haven’t paid attention.

NASIR: No, it is. They’re putting up more services with it, too. For example, if you have YouTube Red, you can listen to music while your screen is off on your phone and different things like that.

MATT: That’s my take. The reason I ask that is, if you’re paying for something, there’s a greater expectation there. But, for this, let’s say you put something up on YouTube and you’re not paying anything and you just put this video up, I mean, how upset can you really be? I mean, I get why people are upset but you see what I’m saying. You’re getting something for free. You’re getting basically a free platform to put your videos up.

NASIR: Yeah. I mean, it’s true and aren’t there some YouTube users that actually have advertising contracts with YouTube directly? Not separate than just the automatic ads.

MATT: Probably.

NASIR: Some of the high-volume or visitors that actually generate traffic, I actually think they have actual negotiated contracts and I’m sure in those contexts, those agreements with the social media giants are a little bit different. But, if you’re just the typical user and the terms of services apply, you have to kind of just accept that there’s some risk involved because you have such dependence upon that free marketing tool that you’re using.

MATT: Yeah. The thing I hate now is that basically every video has an ad before it. I go to ESPN.com and this has been multiple times I’ve watched a 15- or 20-second video and there’ll be a 30-second video ad. It’s like the ad is longer than this video I want to watch. I have to sit through something that’s sometimes twice as long as the actual little segment I want to watch. It’s getting ridiculous.

NASIR: Ah, first-world problems, right?

MATT: Yeah. So, I mean, we kind of gave the advice for businesses I think and, as one-sided as these terms of service are for Facebook, YouTube, et cetera, you just have to be smart about it and follow the rules and make sure you’re not doing anything. Usually, what it has is a list of things that are prohibited from doing. So, as long as you’re not doing those, it should be okay.

NASIR: Yeah, absolutely, and just think about it this way – I’ve seen businesses that all of a sudden they had all this traffic and they’re doing really well in their marketing game but then all of a sudden that channel gets turned off and most businesses can’t afford that in their beginning years, especially if you’re in retail and so forth, you depend so much upon some of these marketing channels and, if it gets turned off, you’re in trouble.

MATT: No, I mean, now, if that happens to your business, you should be upset about it. It could really ruin your business; the way people search online these days.

NASIR: Absolutely. So, I think that’s our take-home advice. Just listen to the entire episode for the takeaway advice.

MATT: Well, I guess, yeah, this will be perfect. I’ll ask for your predictions for the final four since it’s in your hometown.

NASIR: Oh, yeah, it’s in Houston, Texas. We’re very excited. I don’t know who’s in it yet.

MATT: We just talked about this yesterday, by the way.

NASIR: Yeah, but did you tell me who was in it or was I just not paying attention?

MATT: I mentioned at least one team, for sure.

NASIR: And that one team was Xavier?

MATT: No, they lost.

NASIR: UC?

MATT: Uh, close.

NASIR: CEU? I don’t know.

MATT: UNC.

NASIR: Oh, yeah, that’s right. Oh, yeah, you did mention that, I forgot.

MATT: Yeah.

NASIR: No, but, actually, one of the cool things in Houston is that one of the hotels has this nice decal on it and it says Final Four. That’s probably the most exciting thing that I’ve seen so far regarding the final four.

MATT: Big time.

NASIR: All right.

MATT: That’s your prediction? UNC to win?

NASIR: Yeah, one of the four.

MATT: I’d think there’s a good chance of that happening.

NASIR: Well, I mean, I don’t know. It could be a contested brokered convention they’ve been talking about for a while. So, some dark horse candidate. What are we talking about? Basketball?

MATT: Yeah. UNC is currently under investigation for academic fraud.

NASIR: Okay. By the time they get to the finals, they’re going to be in jail.

MATT: Possibly.

NASIR: All right. Well, thanks for joining us!

MATT: Yeah, keep it sound and keep it smart.

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Legally Sound Smart Business

A business podcast with a legal twist

Legally Sound Smart Business is a podcast by Pasha Law PC covering different topics in business advice and news with a legal twist with attorneys Nasir Pasha and Matt Staub.
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Nasir and Matt discuss the Baltimore law that makes it very difficult to operate food trucks in the city. They also discuss all the legal restrictions tohaving a food truck.

May 11, 2016

Matt listens to Nasir recap the developing battle in his hometown of Vandalia, Ohio over whether a Dunkin Donuts can move into a location in close proximity to a local favorite donut shop. They then discusswhether the issue is more legal or personal.

May 9, 2016

The guys kick off the week by discussing a Nevada employee who is claiming she was fired for not supporting the Scientology beliefs of her employer.

April 27, 2016

The guys discuss the massive floods in Houston,how employers responded, and why one meteorologist became a local hero. They also discuss the steps businesses should take in preparing for storms outside the workplace.

April 20, 2016

The guys discuss the boycott of Amazon over the products of an unnamed presidential candidate. They also talkabout how a business should handle a boycott and whether it’s possible to exit one unscathed.

April 13, 2016

Click here to read HubSpot’s response on this topic. Nasir and Matt discuss the trend in startups to compensate programmers and other early employees with stock options and how the company culture at HubSpot isn’t what it seems.

April 6, 2016

Nasir and Matt discuss various lawsuits against social media platforms in which users are accused of artificially inflating their social currency.

We represent businesses.
That’s all we do.

Oh, and we love it.

We love our work. We love reviewing that lease for your new location. We thrive on closing that acquisition that nearly fell through. We’re fulfilled when we structure a business to grow, raise capital, and be legally protected.

We focus on developing close relationships with our clients by being like business partners. A partner who provides essential, personalized, proactive legal support.

We do all of this without utilizing the traditional billable hour model. You pay for the value we bring, not the time spent on calls, emails, and meetings.

Our team is made up of attorneys and staff that share these values and we are retained by clients who want the same.

Pasha Law PC operates in the states of California, Illinois, New York, and Texas.

Meet Our Team

Fractional General Counsel Services

Pasha Law Select offers the expertise of a high-end general counsel legal team for every aspect of your business at a fixed monthly rate. Pasha Law Select is deliberately designed to allow our legal team to be proactive, to anticipate, and to be comprehensive in serving our clients. To be great lawyers, we need to know our clients. We can’t know our clients unless we represent a select number of clients in the long-term. This is Pasha Law Select.

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