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Why Users of Ashley Madison May Not Sue for Data Breach [e210]

The guys close out the week but talking about the data breach on the second largest dating website and why we may not see the lawsuit you would expect.

Transcript:

NASIR: All right. Welcome to our podcast where we cover business in the news and add our legal twist. My name is Nasir Pasha, the host and co-host of Legally Smart Sound Business dotcom – not dotcom, the podcast.
MATT: Host and co-host.
NASIR: And also joining me is Matthew Staub.
MATT: Exactly. Don’t even have to say it.
NASIR: And who are you?
MATT: You already said it.
NASIR: Well, I mean, I said someone’s joining me. No one knows who you are though.
MATT: Oh, Matt Staub. You said my name, too.
NASIR: Yeah, but what are you doing here?
MATT: I’m co-host, not host.
NASIR: Co-host of the podcast.
MATT: Exactly.
NASIR: By the way, how did you do research for today’s topic? Did you do it on your computer while you were next to your significant other?
MATT: No. Actually, I think you had sent me a link about this earlier in the week so I already knew about it. My wife had seen it because she browses Yahoo! top stores for some reason – the only person that goes to Yahoo!
NASIR: No, my wife does too. In fact, she already knew it as well. I’ll ask her to find out how she found out about it.
MATT: We were sitting there and she’s like, “Oh, there’s a site for cheaters.” It’s like, “Yeah, we talked about this on the podcast.”
NASIR: Don’t you listen and take notes.
MATT: We definitely talked about this.
NASIR: We barely mentioned it, yeah.
MATT: Yeah, because her point was like, “Why wouldn’t the spouse just create an account and see if their other spouse is on there?” I was like, “I don’t even know how it works, to be honest.” I mean, maybe that could work but I think it’s secret.
NASIR: Yeah, I assume it’s anonymous or something.
MATT: It has to be. But we’re talking about…
NASIR: Or is it?
MATT: Well, yeah, it has to be based on what we’re talking about now.
NASIR: Yeah.
MATT: So, Ashley Madison, I guess they classified as a dating site because it’s considered the second-largest dating site.
NASIR: No way? Second-largest?
MATT: Yeah.
NASIR: I’m so surprised, actually.
MATT: Behind match.com, 37 million users.
NASIR: Wow. No way. I honestly cannot believe that. That’s crazy.
MATT: With more than 37 million members worldwide, Ashley Madison claims to be the world’s second-largest dating website, only match.com has more or is bigger.
NASIR: Wow.
MATT: Yeah, pretty new site. The problem now is that the site was hacked and whoever has hacked it – or whomever has hacked it – is threatening to reveal the information of the users which is going to be a problem because now all these adulterers are going to be revealed to the general public. I guess it’s going to do something that’s going to match the information to find out names and addresses, et cetera. I mean, I don’t know the details of the actual threatened hack but this could pretty much be a game-changer. It probably is already a game-changer for this site. I bet it’s probably ruined now.
NASIR: Yeah. I mean, this has been heavily populized, no?
MATT: Publicized.
NASIR: Publicized. Populized… Publicized in the media to the extent that pretty much even people that didn’t know about the site now know about the site but know it as a place that, if you want to cheat on your spouse, your information is not necessarily private. The most interesting part about this and I think where we’re kind of covering this is that Ashley Madison apparently told its customers that, okay, if you pay $19.00 then they’re going to completely erase your profile information. The implication of that is that, okay, well, if I pay this extra amount then that means that pretty much your information is protected and it’s pretty much deleted. I can foresee this where – I don’t know – maybe your subpoenaed or Ashley Madison’s subpoenas for its records to some kind of legal issue, legal dispute, and they want to look to see if this person is part of the site or whatever, they don’t have the records. But the problem is that, when this hacker group – which is Impact Team which, by the way, they seem to have some kind of moral or political agenda because they previously did the same to AdultFriendFinder which I assume is similar but I don’t really know about that but anyway – what they did is, when they hacked, they were able to obtain the credit card information and the associated personal data besides that and, of course, all these people that are on the site, they pay with credit cards so the purchase details were not removed, even for those that pay this $19.00 fee. Literally, when you’re paying this $19.00 fee to remove information, that information that you’re using to purchase is still being held on the computer on the server so it’s basically, you know, became useless. And so, this hacker group basically has threatened to release this information every day until the site’s been taken down.
MATT: Yeah. I mean, this is your standard credit card breach. I’d think it’s already ruined the website. I think they’re pretty much done. I mean, I don’t know. Actually, I take that back. This isn’t going to ruin them because these people that are on here are – sorry if you’re listening and you’re one of the people but – these people are already dumb enough to go on here in the first place, they’re probably going to continue to – at least some of them – will continue to use it.
NASIR: Yeah, my law clerk Jacob actually helped us do some of the research. He was saying the same thing that this site’s going to be done and that’s what people are saying. I was questioning that too, especially now that you told me that they’re the second biggest, there’s a lot of things that can bring a site like this down, but a moment of breach may not be enough. But, here’s the thing, Ashley Madison has been relatively pretty successful in being able to get that private data off the internet which seems strange but there’s a saying in law that basically says that there’s a remedy for every wrong and that, by the way, Matt is one of my favorite maxims.
MATT: A remedy for every wrong?
NASIR: Yeah. This is a reference to Monday’s episode where the belt and suspenders approach was the worst phrase even in legalese but yeah, no, there’s a saying, “There’s a remedy for every wrong.” In this case, I think it’s controversial whether this is the correct remedy but Ashley Madison was able to file DMCA notices to all of the websites that were posting this private data which apparently is just a few names for now and I’m sure by the time this has come out maybe it’s more. But the point being is those DMCA notices have been able to push these pages off Google’s index and also taken down by the website owners themselves.
MATT: Yeah, I thought you were going to say Jacob was upset that this happened because I probably didn’t go that route.
NASIR: Yeah, he was concerned that his data would be leaked. No, that’s not true.
MATT: That’s why, you know, it’s at the stage that it’s at and hasn’t been a full-on release like it was threatened but it raises an interesting topic of, if somehow this information gets leaked or eventually ends up happening, I guess the site, Ashley Madison’s site, I guess is going to be liable possibly to some extent. But, like, are these people or do these users go? I guess, at that point, you’re already in the open, you might as well just go after them in a public lawsuit.
NASIR: Yeah, if you become a victim that actually, I think he would have to wait for your reputation to be damaged and somehow it’s publicized then that could be a problem because I think them being hacked in itself and their private information or even their credit card numbers or whatever, I think it was encrypted at least, that in itself doesn’t expose themselves to much liability and we’ve talked about data breaches in the past and giving notice to your customers and so forth. But, the more important issue is that, when you have a promise – and I’m sure there’s some fine print here that may have Ashley Madison covered or whatever – let’s assume that they don’t or even let’s assume that they do – when there’s an understanding from the consumer that I’m going to pay you $19.00 to remove my private information and then it’s not removed, there’s something inherently wrong with that and I can see that having some liability. My prediction, even if the terms of service has some protections of Ashley Madison, this will turn into a class action lawsuit for which will allow some level of privacy to its users and you will have some representative plaintiffs and, since Ashley Madison has its directory of all the customers in that class action, they can subpoena those records and be able to send notices to all those users which, in that case, which would be I guess – now that I think about it – that would be problematic in itself because I’m sure everyone’s aware, when you get a class action, when you’re part of a class, you get some kind of notice so how would they contact those users? I guess that would be prohibitive.
But, anyway, the DMCA notice is interesting because DMCA notices are used to combat against copyright infringement. This was a law passed in the 1990s, somewhere around there, and we’ve talked about it in the past. Basically, if someone posts some kind of copyrighted material somewhere, it allows a process that’s expedited very heavily in favor of the copyright holder to take down that material because, if they don’t comply, then there could be damages from it for that website. But here’s the thing and this was my instinct too. Ashley Madison is actually abusing the DMCA notices because how can they really say that they own a copyright over a name or a list? If it was the whole list, I can understand that. But, if I write a news article and say Matthew Staub is a user of Ashley Madison – which is not true – then that itself is not a copyright violation so that information and how I got that material or whatever – you know, if I got it illegally, that’s a different issues – but that material itself doesn’t have copyright protections.
MATT: Well, first of all, these podcasts get transcripted so that sentence is going to appear online and that’ll bring the defamation.
NASIR: It’ll be a Google. Google will say “…” before it’ll get cut off and truncated before I say that‘s not true.
MATT: I hope so.
NASIR: What’s done is done. I mean, you brought up a good point about this is really problematic because even if these users have been wronged somehow, how do they get that remedy? You know, for every wrong, there’s a remedy. How do they actually get to it if it requires them exposing themselves? I just talked out loud and I just realized myself that a class action won’ t work because how do you notify the class that they’re a part of the class? And so, on one hand, Ashley Madison may have done something wrong by not deleting the privacy data – maybe they didn’t, it depends on the terms. But, even if that’s the case, even if they did something wrong, what are people going to do about it?
MATT: Yeah, and that’s another thing. You can’t really fire somebody if you’re an employee somewhere. You can’t really get fired for this. I mean, the most negative aspect of it is going to be on your personal life and what are you going to do? Sue your former spouse or ex-girlfriend/boyfriend? I mean, the most damage is going to be to the users, really, if their information gets revealed. I came around, throughout this episode, I think the company is going to be able to survive this just because there’s too many people that are still wanting to use and I want to say protections in place but too many hurdles to jump over.
NASIR: Hurdles.
MATT: Ah! I beat you to it.
NASIR: You know, I just thought of one way. If I was an attorney for one of these guys – and, by the way, I’m not soliciting for any of those types of clients, I wouldn’t be interested in that case but – for any of these users that have somehow been damaged, I would be presenting a case to the FTC because, if somehow they were able to enforce this and procure damages, maybe not on behalf of the user but really punish Ashley Madison and find them for basically making representations in their business practices that didn’t end up being true. Again, the caveat that I’m not sure exactly what was promised, when you remove private information, what private information and so forth, but it seems to be the understanding that all information was supposed to be removed. The FTC may be able to do something.
MATT: I was going to say, I mean, even if that’s the case and they’re able to do that, if the information comes out, the damage is already done for the users. No going back on that. You can’t Men in Black – hit the button and make them forget, wipe out their memory.
NASIR: Once the bell is rung, it’s rung. Yeah, and the FTC has reached a settlement with Snapchat last year. I don’t know if you guys remember that because, if you recall, the whole idea of Snapchat was that you had disappearing messages but, apparently, somehow the messages were still being held on third-party or some loophole with third-party apps or something like that and they had to settle with them. That happened last year and so they could very easily do the same thing or something similar with Ashley Madison which, by the way, I’d just downloaded Snapchat and it seems to be nothing of what I thought it was in the beginning. It’s very weird. I can’t even… I went to a YouTube video to figure it out. I literally typed in “how to use Snapchat” on YouTube. It was very confusing.
MATT: There wasn’t anything that existed because all the videos disappear after ten seconds. I mean, do you use it at all? I used it for a couple of weeks and then I was like, “Eh… I don’t see any value in this.”
NASIR: I don’t know. My wife showed me something cool like it was showing some kind of event in Houston where you could see what’s going on. I wasn’t able to do it on mine or I guess I was able to do it on my phone so that was kind of neat but…
MATT: Isn’t that Periscope?
NASIR: Yeah, Periscope’s pretty big. But, no, it was something similar to that but, basically, you can press some kind of category and it said, like, Houston. I pressed that and it showed a video of 50 different Snapchat videos of what’s going on in the area within the last few hours. It was like some concert over here and then some other thing going on there.
MATT: Gotcha.
NASIR: Yeah. Anyway, that’s our Snapchat episode, right?
MATT: Yeah, I think we’ve talked about that before too. Did you know that Ashley Madison is the sister of Billy Madison?
NASIR: No, but Billy Madison is a real person? Or the character from Billy Madison?
MATT: Oh, it’s a real person.
NASIR: Oh, it’s still a character… I got you. That’s the concept of where Ashley Madison came from?
MATT: I was trying to figure that out.
NASIR: That’s copyright infringement!
MATT: It’s this guy that started the business – actually, I don’t know if he started it but I assume he’s the guy who started it. I don’t know where the name Ashley Madison came from. Probably some sort of reason for it.
NASIR: Yeah, probably. I’m still honestly shocked that it’s the second most popular dating site. I’m so surprised.
MATT: That’s the thing. It has its own niche as opposed to match.com and I don’t even know the other ones.
NASIR: Match.com and the other match.com-like sites.
MATT: I mean, there’s commercials all the time and I can’t remember any of the names.
NASIR: No.
MATT: There’s the old guy with the glasses who’s on a bunch of commercials.
NASIR: Yeah, I want to say that’s eHarmony.
MATT: Yeah, that’s eHarmony – stuff like that.
NASIR: The guy with the glasses dating site. I recommend that.
MATT: Plenty of fish just got bought out by somebody so whoever I saw that for some reason.
NASIR: There’s plenty of fish in the sea, as they say.
MATT: I think that’s the concept of the dating site.
NASIR: Oh, okay. All right. Well, let’s end this episode before it deteriorates even further.
MATT: Yeah, I agree.
NASIR: All right.
MATT: All right. Keep it sound and keep it smart.

Nasir Pasha & Matt Staub

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