Pixel tracking is at the forefront of digital marketing innovation and is a critical tool for understanding user behavior and optimizing marketing strategies. However, this powerful technology requires responsible use, especially considering its liability and insurance implications.
Understanding how pixel tracking impacts claims and risk underwriting is critical for businesses, claims professionals, and insurers looking to mitigate these risks.
double edged sword
To explain this technology in more detail, pixel tracking works by allowing third-party content aggregators to install cookies on your machine (usually with your consent) to track the web pages you visit. Get selected information including pixels from.
This information is relayed from your cookie to a data aggregator and used to compile metrics about website traffic and interactions with the website. Common uses for pixel tracking include email marketing, website analytics, ad retargeting, conversion tracking, audience measurement, etc., allowing marketers to hone their strategies and personalize content. It will look like this.
Despite its usefulness, pixel tracking poses significant privacy and security risks. Insurance claims resulting from pixel tracking activity are on the rise, particularly for alleged violations of privacy laws such as the Video Privacy Protection Act (VPPA) and the California Invasion of Privacy Act (CIPA). These laws impose statutory damages ranging from $2,500 to $5,000 per violation, highlighting the potential economic impact for companies utilizing pixel tracking technology.
Evolution of pixel tracking
We are now seeing the emergence of a second wave of lawsuits related to pixel tracking marketing efforts. Initially, pixel tracking primarily operated on traditional computing devices such as laptops, PCs, and Macs. However, a notable shift is occurring as similar technologies are integrated into mobile platforms.
Major companies such as Google Analytics, Adobe, and Blaze are spearheading this transition. In addition, the plaintiff company employs technicians to identify mobile technology that uses pixel tracking so that it can identify new targets for litigation. This change highlights the growing reach of pixel tracking and the need for insurers to adapt their risk assessment strategies accordingly.
Businesses wishing to avoid liability due to pixel tracking should prioritize obtaining cyber insurance. While some media policies cover these risks, they often contain exclusions that limit their effectiveness.
Businesses should carefully consider these exclusions, particularly those related to inappropriate data collection, to ensure appropriate coverage. In the face of mounting losses from VPPA and CIPA-related litigation related to marketing technology, many insurance companies are beginning to exclude pixel tracking liability. However, through negotiation, companies can obtain approval to restore coverage depending on the controls they have in place. This collaborative approach between insurers and businesses facilitates a tailored response to the unique risks of pixel tracking, thereby increasing overall protection and reducing potential liability.
Navigating the legal landscape
Regulatory requirements and guidelines regarding pixel tracking and data privacy have been outlined in various laws, and more are expected in the future. In the United States, regulation is fragmented, led by government agencies such as the Office for Civil Rights (OCR), VPPA, and CIPA, as there is no central oversight by the federal government. For example, his recent OCR guidance highlights the importance of securing consent for pixel tracking activities if the data aggregator is not a business associate under her HIPPA regulations (which is unlikely to be the case). It has been.
Consent requirements can be difficult to deal with, but implementing best practices for obtaining consent can be extremely helpful for businesses aiming to comply with legal requirements that effectively reduce legal requirements. It is important.
One effective method is to use pop-up notifications tailored to the specific pixel tracking technology employed. A prime example of this practice is found in companies operating within the jurisdiction of the EU General Data Protection Regulation (GDPR). GDPR requires clear and explicit language.
Companies should also be aware that what constitutes a valid consent under one law may not apply under another law. For example, an agreement under the VPPA is valid for only two years and must be renewed periodically. This requirement typically aligns with the terms of service or usage updates found on platforms like Netflix and Amazon, which require consent to expire and be renewed.
The role of insurance companies
It's entirely possible that insurance companies are employing pixel tracking technology to glean valuable insights into consumer behavior. Such data provides insurance companies with information about visitor demographics, areas of interest, and potential problems with the application, helping them with better customer service and targeted marketing. Regardless of industry segment, the key to effective risk mitigation for market technologies lies in how effectively they vet compliance.
Although insurance companies are not typically the focus of VPPA claims, they can easily face increased scrutiny under CIPA if they do not follow consent protocols. By leveraging lessons learned from previous VPPA cases in the early 2010s and the recent spate of marketing technology cases, insurers can leverage industry knowledge to proactively address risks and improve industry standards for data privacy. You can set the. This proactive approach is consistent with our role as a leader in risk management, leveraging our vast treasure trove of insights to prevent recurrence of previous errors and maintain data privacy compliance.
Proactive risk mitigation strategies
To stay ahead of the new risks associated with pixel tracking, companies must leverage both internal and external resources. Internally, it is essential to understand the marketing strategies and technologies a company employs, as well as fostering collaboration between marketing, legal, and IT departments to ensure compliance.
Externally, maintaining relationships with law firms and technology vendors can provide valuable insight into legal trends and new developments in the digital marketing space. Additionally, by continuing to work with insurers, we can provide first-hand information on risk management strategies, enabling insureds to proactively address emerging threats.
conclusion
Mitigating the risks associated with pixel tracking requires a multifaceted approach. First, it's important to establish a robust process for vetting compliance between marketing, legal, and IT departments. Second, to ensure compliance with legal obligations, it is advisable to obtain consent in advance, perhaps through a pop-up mechanism.
And finally, it is essential to review arbitration agreements, as they can be used as a weapon against companies facing a high volume of claims. In conjunction with class action waivers, implementing an informal dispute resolution process prior to arbitration can help reduce the financial risks associated with marketing technology claims.
Ultimately, understanding the risks and making informed business decisions is the key to protecting yourself from potential liability related to pixel tracking.
Trotta is QBE North America's vice president and claims practice leader for the Cyber and Professional Liability and Finance divisions. Trotta has 20 years of experience handling and advising on claims involving management and professional liability insurance coverage. Trotta holds a J.D. from New York Law School and is a Certified Information Privacy Professional.
