Author: Danielle Citron


Greater Transparency for Slots Than Voting (Priorities Folks!)

120px-Slot_machine.jpgNews from Underground has a priceless posting comparing the steps states take to ensure the accuracy and security of slot machines and e-voting machines. Here are some highlights. Nevada requires vendors of slot machines to provide it access to the machines’ software. By contrast, for most states, the source code for e-voting machines remains safely in the hands of vendors with no right of access provided to election officials or the public. A Nevada agency certifies slot machines, and the public has an opportunity to comment on that certification process. Depressingly, a select number of private companies certify e-voting machines at the vendor’s expense and the certification process is deemed a trade secret. Yes, even the certification process is hidden from public view.

The bottom line: the gaming business is subject to greater transparency and accountability than our voting process. It seems wrong, and a bit shameful, to associate a greater sense of responsibility and accuracy to gambling than voting. We care more about money earned through somewhat licentious means than our fundamental right to pick our elected officials in an accurate and secure manner. That seems to be where we are right now, but I have my hopes for the future. More to come on that in 2009. For now, happy holidays CoOp readers!


The Costs of Automated Decision-Making Systems

120px-Just_what_do_you_think_youre_doing%2C_Dave%3F_%2893569705%29.jpgStates increasingly use computers to administer government services, often taking human decision making out of the process. For instance, computers terminate individuals’ Medicaid, food stamps, and other welfare benefits. They detect fraud, paying only legitimate claims. Champions of automated systems extol their cost savings. Because these systems reduce the human role in executing government policy and programs, state governments can cut staff and close offices.

But, of course, to save money, we often need to spend money–systems need to be programmed to reflect current policy and monitored to ensure their accuracy. New York’s Department of Health recently learned that lesson the hard way. According to Government Technology, the Department failed to devote sufficient resources updating eMedNY, the state’s automated system used to detect Medicaid fraud and abuse. Because the agency lacked a “formal, structured process” for prioritizing and approving programming updates and changes, the system failed to catch approximately $200 million in fraudulent claims. Audits revealed millions in questionable claims from dentists. One dentist billed Medicaid for providing seven patients with 32 fillings each and then for pulling the same 32 teeth for each patient. Although these opaque automated systems pose many other problems, especially regarding the procedural protections owed individuals, see here, this one has seemingly caught the attention of elected officials.


Science and Technology Workplace, A Predominately Male Face

Two_women_operating_ENIAC.gifRecent studies suggest that fewer girls and women are pursuing, or staying in, careers in science and technology. Six years ago, 28 percent of the undergraduate degrees in computer science went to women. That number, however, dropped to 22 percent in 2005 and now reportedly sits at 10 percent. At the same time, women in the technical community are increasingly leaving their jobs. A recent study published by the Harvard Business Review found that while women made up 41% of newly qualified technical staff, more than half dropped out by the time they reached their late thirties.

Surely, a variety of reasons contribute to the male dominance of science and technology fields. Some blame our “cultural software”: young girls are not taught to enjoy computers. As the director of Northwestern University’s Center for Technology & Social Behavior Justine Cassell explains, “the girls game movement failed to dislodge the sense among both boys and girls that computers were ‘boys toys’ and that true girls didn’t play with computers.” Others suggest that women leave computer science careers to stay at home, in much the same way that women do in any other careers.

But the Harvard Business Review study offers a less benign explanation for women’s departure from careers in computer science, one that arguably accords with our Internet culture: the majority of women working in science and technology leave their jobs for alternative careers or the home to avoid struggling with sexual harassment, the macho “lab coat culture,” and the old boys’ network that excluded them. Nearly two-thirds of the women surveyed for the study said that they had been victims of sexual harassment in the workplace. A total of 43 percent of female engineers said that they had encountered an “inherently sexist culture” in which it was assumed that only men had the skills to succeed in the most advanced posts. Sylvia Ann Hewlett, an economist at the Center for Work-Life Policy and author of the study, explained that although the “predatory” and “condescending culture” towards women has declined in most workplaces in the past 20 years, it has “survived in the engineering, science, and technology context.” This seems consistent with what commentators call the “culture of misogyny” that pervades many social networking sites, blogs, and other Web 2.0 platforms.


Fraud, Everywhere

120px-Wall_Street_Sign.jpgRecent investor pressure to liquidate investments has exposed fraud of massive proportions. On Thursday, federal investigators arrested trader and hedge fund manager Bernard L. Madoff, a former chairman of the Nasdaq Stock Market, for allegedly defrauding investors of $50 billion. According to the accompanying civil complaint filed by the SEC in federal district court, Madoff ran Bernard Madoff Investment Securities (BMIS), a broker dealer and investment firm, where he also maintained a lucrative investment adviser business. Madoff apparently kept that business on a separate floor of the firm under “lock and key” from BMIS employees. There, Madoff managed money for hight net-worth individuals, hedge funds, and other institutions, a business whose steady returns had long provoked skepticism from traders. Early this month, investors sought $7 billion in redemptions from the business. Unable to pay these returns, Madoff allegedly confessed to two senior employees (his sons, according to the Wall Street Journal’s sources) that his investment advisory business was a fraud. Madoff allegedly admitted: “it’s all just one big lie,” a “giant Ponzi scheme” that for years had paid returns to investors out of the principal received from other investors and had nothing left. Madoff apparently told those employees that the business had been insolvent for years and the fraud was worth billions.

This recalls 1987, the “Den of Thieves” period of insider trading, risky takeover stocks, and manipulations of the junk-bond market. As Time reported that year, maintaining integrity was a “difficult challenge in the deregulated, hurly-burly Wall Street of the 1980s, where traders have been tempted to use insider tips to maintain their competitive edge.” Now, as then, fraud has blossomed in the face of loose regulatory controls and oversight as well as a lack of transparency in a complex financial market. One might suppose that our current task is to figure out how to strike the balance between tougher regulation and a productive and unencumbered market. But there are no doubt other important questions, and hopefully our insightful corporate/law and economics gurus Dave, Frank, Lawrence, and Nate will help us explore them.


FCC Investigation Ends With Unduly Sharp Criticism

120px-US-FCC-Seal.svg.pngThis September, the House Energy and Commerce Committee concluded its investigation into the FCC’s alleged abuses of its “regulatory procedures and practices,” telling the public that it would return with a final report. Yesterday, the Committee returned with a vengeance. Democratic lawmakers released a scathing 110-age report entitled Deception and Distrust:The Federal Communications Commission Under Chairman Kevin J. Martin. The report takes the agency to task for its so-called dysfunctional nature and secretive procedures. According to the report, FCC Chairman Kevin Martin manipulated and withheld data and reports to advance his own policy positions. The report asserts that Martin pressed staff to rewrite an agency report that did not support his push for rules allowing cable subscribers to pick and choose channels instead of buying bundled program packages. And it characterized Martin for leading the agency with a closed culture, a “heavy-handed opaque and non-collegial management style that created distrust, suspicion, and turmoil among the five current commissioners.” Aside from a suggestion that a FCC Bureau Chief violated travel rules by charging per diem work fees for days he was not working, the report found no legal or procedural violations by Martin or other agency officials. Although the investigation began as a bi-partisan effort, it ended with only the democratic representatives’ approval of the report.

Because the Committee acknowledged that the FCC Chairman did not violate the law or regulatory procedures, the report’s strident tone casts doubt on its credibility. Many will no doubt dismiss the report as a partisan hatchet job, a parting shot at a Republican appointee. But this should not divert the public from the report’s important message: the need for more transparency in agency policymaking and procedure. Government opacity is not a partisan problem, at least not at the FCC. As Gene Kimmelman of the Consumers Union explains, the FCC has needed to reform its “closed door” secrecy for over 25 years. Hopefully, the Obama Administration and its campaign call for open government will change this course.


Zuckerberg’s Law of Data Sharing

58px-Mark_Zuckerberg_May_2007.jpgTechnologists have helped us recognize many important laws of the universe, some empirical and some metaphorical. For instance, Moore’s Law teaches us that computers double their power about every eighteen months. Metcalf’s Law attests to the power of networks: the value of communication technologies and networks such as the Internet and social networking sites increases as the number of users do. Reed’s Law tells us that the utility of large networks, particularly social networks, can scale exponentially with the size of the network. And Linus’s Law explains that “given enough eyeballs, all bugs are shallow.” Or: “Given a large enough beta-tester and co-developer base, almost every problem will be characterized quickly and the fix will be obvious to someone.”

Here may be another law: Mark Zuckerberg, chief executive of Facebook, predicts that “next year, people will share twice as much information as they share this year, and that next year, they will be sharing twice as much as they did the year before.” As Zuckerberg explains, people are ever more willing to tell others what they are doing, who their friends are and even what they look like as they crawl home from a college party. So this means, if true, that in the aggregate we will be posting more photos to Flickr, uploading more videos to YouTube and music to Tumblr, sharing travel plans on dopplr, uploading our transactions to wesabe, posting our stock trades to covestor, and many other forms of social sharing. And it also suggests a few other things. First, we will no doubt see more tools emerge that integrate and analyze this data across sites (and hence making it more commercially valuable). Second, we need to keep talking about privacy: how we understand, value, and protect it. As Dan Solove’s long-standing project and superb book Understanding Privacy teach us, it is this task that is most urgent to take seriously.


Midnight Madness

94px-The_Mountain_Brook.jpgA flurry of rulemaking activity typically accompanies Presidential transitions, a means for the exiting Administration to leave its final imprint on policy. (See this post on Presidential transitions and agency rulemaking). In this respect, the Bush Administration is no different than its predecessors. According to The New York Times, the White House Office of Management and Budget recently approved a final rule that will make it easier for coal companies to dump rock and dirt from mountaintop mining operations into nearby streams and valleys. This readies the rule for publication in the Federal Register, the final stage in the rulemaking process. The new rule will allow coal companies to dump materials that in the past they could do only in exceptional circumstances and only with permission from the government.

E.P.A. Administrator Stephen Jonhson applauds the rule, initially proposed five years ago, as a way to increase our dependence on clean coal technology and decrease our dependence on foreign oil. A coalition of environmental groups argue that the rule would accelerate “the destruction of mountains, forests, and streams throughout Appalachia.” For instance, policy analyst of the Sierra Club, Edward Hopkins, noted that: “The E.P.A.’s own scientists have concluded that dumping mining waste into streams devastates downstream water quality. By signing off on this rule, the agency has abdicated its responsibility.”

Environmental law scholar Robert Percival recently noted in an interview with Maryland Public Radio that the Bush Administration is in the midst of finalizing dozens of other rules that would cater to the needs of energy industries and degrade the environment. Some would involve major changes to the Clean Air Act, such as permitting pollution that would degrade visibility in national parks and exempting factory farms from reporting Clean Air Act violations. To be sure, some of these midnight rules may has limited lives: the Congressional Review Act permits an up or down vote on regulations passed 60 days before a new Administration takes over and some rules may not survive judicial review. But, as Percival explains, some midnight regulatory activity may be very hard for the Obama Administration to undo, such as leases to oil companies. Time will tell how much midnight madness ensues.


CBGB’s Post Script: Not So Punk

120px-CBGB_club_facade.jpgThe iconic music club CBGB & OMFUG (aka CB’s) opened its doors in 1973, featuring acts like Patti Smith Group, Television, The Ramones, Talking Heads, The Dictators, and Blondie. Although initially intending to showcase a variety of music (hence the full name “Country Blue Grass Blues and Other Music For Uplifting Gormandizers”), founder Hilly Kristal ended up nurturing America’s punk scene. During the 1980s, hardcore bands such as Reagan Youth, Muphy’s Law, and Agnostic Front appeared during Sunday matinees, often called “thrash days.” At CB’s, the bathrooms had no doors; fliers papered the walls. After a thirty-three year run, the club closed in October 2006. Patti Smith appeared in a final concert to bid the club adieu.

Although now gone, the club remains legendary, the memory of rebellion, stale beer, and cigarettes firmly stuck in many’s minds. This Tuesday, fans and celebrities like Stevie Van Zandt and The Dictator’s Handsome Dick Manitoba came to the opening of the Rock and Roll Hall of Fame Annex NYC to see an exhibit of CBGB artifacts, including the club’s tattered awning, cash register, and flier-covered phone booth.

But the club’s past does not resemble the present wranglings over its legacy. When club founder Hilly Kristal died last year, he left the majority of his estate (worth millions due to the popularity of CBGB tee-shirts) to his daughter, leaving his son and ex-wife disappointed and ready to challenge the will. In a suit filed in Surrogate’s Court in Manhattan, Mr. Kristal’s former wife (and mother of his children) claims that she is the rightful owner of the business and that Mr. Kristal and their daughter deceived her by hiding the money from the sale of the CBGB merchandise. As Karen Kristal (the founder’s ex-wife) explained to The New York Times, “I put up the money, spent my time in there. And then my daughter says that they get it all. And that’s a lie.” Longtime members of the CBGB community shake their heads at the ugliness of the dispute but insist that CBGB’s symbolic place as the birthplace of punk rock will remain undisturbed. The Ramones’ artistic director Arturo Vega offers that the lawsuit “shouldn’t reflect what this place was about . . . . CBGB was a beacon of freedom for young people, something to believe in.” Indeed.


The Booming Cybercrime Economy

111px-Digitale-crimi.pngAs ars technica reports, the underground cybercrime economy is flourishing. A recent whitepaper released by security company Symantec documents the vast market involved in the sale and trading of stolen credit cards, bank account credentials, email accounts, software, and other data that can be exploited for profit. The report estimates that, for the period covering July 2007 to June 2008, the total value of advertised stolen goods added up to $276 million. The most advertised, requested, and expensive product was credit card information, probably because it is difficult for merchants to identify fraudulent transactions before an online sale is completed. Bank account data stood as the next most popular product, likely due to the fact that balances of accounts can be transferred online to untraceable locations within minutes. “Attack tools” are also prominent goods for sale–services that steal information through denial-of-service attacks, engage in spamming and phishing campaigns, and generate botnets. (Most of the stolen information is obtained and distributed through these services).

Protecting sensitive information from this underground market, however, is often difficult. Consumers and organizations can follow welll-known (but imperfect) strategies to protect themselves. They can use antivirus, firewall, and antiphishing software. Because computer users are themselves a large part of the problem, technology alone cannot reduce the theft of sensitive information. Individuals need to be educated about phishing, which lures people into giving up personal or corporate information. An estimated 3.6 million Americans fell victim to phishing last year, leading to losses of more than $3.2 billion. As computer scientist Lorrie Faith Cranor recently explained in Scientific American, the number of phishing victims can be reduced by constantly improving phishing detection software and updating computer users about new types of phishing attacks. At the end of the day, however, phishers and their criminal cohorts are constantly evolving their tactics to stay a step ahead of technologies that combat their efforts and improving their ability to evade law enforcement. Time, of course, will tell if this underground market grows even more robust in the months to come.


Introducing Guest Blogger Shruti Rana

srana.jpgI am delighted to introduce my colleague Shruti Rana who will be guest blogging with us this month while she teaches in China. Professor Rana is an Assistant Professor of Law at the University of Maryland Law School, where she currently teaches Contracts and Comparative Commercial Law. In December 2008, she will be a visiting professor at the Central University of Economics and Finance in Beijing, China. She received her J.D. from Columbia Law School, an M.Sc. in International Relations from the London School of Economics, and her B.A. from the University of California, Berkeley. Prior to joining the University of Maryland, she was a Social Affairs Officer at the United Nations and practiced commercial and administrative law at Williams & Connolly LLP in Washington, D.C., and Quinn Emanuel LLP and Bingham McCutchen LLP in San Francisco, CA. She also clerked for the Hon. James R. Browning at the U.S. Court of Appeals for the Ninth Circuit.

Her research focuses on the intersection of administrative law and immigration policy, comparative approaches to credit regulation, and corporate accountability.

Some of Professor Rana’s publications include:

Streamlining” the Rule of Law: How the Department of Justice is Undermining Judicial Review of Agency Action, University of Illinois Law Review (forthcoming 2009).

From Making Money Without Doing Evil to Doing Good Without Handouts: The Experiment in Philanthropy, 3 Journal of Business & Technology Law 87 (2008).

Fulfilling Technology’s Promise: Enforcing the Rights of Women Caught in the Global High-Tech Underclass, 15 Berkeley Women’s L.J. 272 (2000), reprinted in Women, Science & Technology: A Reader in Feminist Science Studies (Mary Wyer et. al. eds., 2d ed. 2008).