Ramirez on Spousal Wiretaps in the Digital Age

Karli Ramirez has posted “To Catch a Snooping Spouse: Reevaluating the Roots of the Spousal Wiretap Exception in the Digital Age” (170 U. Pa. L. Rev. (Forthcoming)) on SSRN. Here is the abstract:

Growing concerns over digital privacy can easily create tension in romantic relationships, including marriages. The Federal Wiretap Act is one example of a statutory vehicle for deterring and punishing spying in spousal relationships, but it is an unavailable tool in the Second and Fifth Circuits because of a judge-made spousal exception to the Act in those jurisdictions. Intercepting communications between one’s spouse and a third party is permissible under the spousal exception, making it difficult to hold spying spouses accountable for their actions. This work argues that because the spousal exception was created at the time of continued institutionalized subordination and limited privacy rights of women, two exceedingly outdated and sexist notions, the spousal exception has no basis in modern society and can no longer be seen as good law.

Parsons on Tax’s Digital Labor Dilemma

Amanda Parsons (Columbia Law School) has posted “Tax’s Digital Labor Dilemma” on SSRN. Here is the abstract:

Digitalization has reshaped the relationship between companies and their customers and users. Customers and users increasingly serve a dual role. They are not only consumers but also producers, creating content and data. They are a value-creating workforce, functioning as “digital laborers.” Under the current U.S. international tax system, the presence of digital laborers in a country does not grant that country taxing rights over income stemming directly from those digital laborers’ content and data creation. As a result, what are essentially the same business activities—workforces creating products and performing services for a company—are taxed differently when they are performed by digital laborers rather than a traditional workforce. This inconsistency and the accompanying outcome that countries cannot tax corporate income arising from extensive business activities within their borders has led to cries that the current system is unfair.

Recent reforms addressing this outcome, including digital services taxes and proposals granting taxing authority over residual profits to market jurisdictions, most notably the OECD Pillar One Blueprint, share a common weakness. They do not recognize the function of digital laborers as producers in the modern economy. As a result, they overturn the theory of source-based taxation as a taxing right granted to the country of production, not the country of consumption, as well as introduce major structural changes to the international tax system—all to correct an unfairness that can be remedied under the system’s current theoretical framework and structure.

This Article rejects the notion that these major theoretical and structural changes are necessary or even an appropriate method to allow digital laborers’ home countries to tax income directly related to their work. Instead, the international tax system should recognize digital laborers’ role as a new type of workforce for companies and, accordingly, allow their home countries to tax income related to their work under the existing application of the source principle and with more incremental structural reforms. In addition to minimizing disruption in international tax law, this approach brings a return of coherence and a sense of fairness by taxing equivalent economic activities equivalently.

Jiang on Technology-Enabled Co-Regulation as a New Regulatory Approach to Blockchain Implementation

Jiaying Christine Jiang (NYU Law) has posted “Technology-Enabled Co-Regulation as a New Regulatory Approach to Blockchain Implementation” on SSRN. Here is the abstract:

Blockchain technology has great potential to reshape the financial industry. However, the existing policy and regulatory regimes fail to provide a supportive environment for blockchain technology to fulfill its potential. In this article, I propose technology-enabled co-regulation as a new approach to blockchain implementation, especially in the financial markets. This approach has two distinctive elements: a collaborative environment and a technology-enabled mechanism. A collaborative environment consists of regulatory and industry sandboxes in which regulators and industry representatives can experiment with novel ideas. A technology-enabled mechanism is empowered by regulatory technologies (RegTech) and supervisory technologies (SupTech) that support compliance with regulatory and reporting requirements and facilitate supervisory obligations. This technology-enabled co-regulation can help to achieve policy and regulatory goals: a fair and efficient market, financial stability, consumer and investor protection, law enforcement efficiency, and, most importantly, technology innovation. Technology-enabled co-regulation is preferable to traditional command-and-control regulation and self-regulation. Its collaborative and technological elements are also more advanced than a simple co-regulation is. To reach this conclusion, I conducted an impact assessment of proposed regulatory options. The impact assessment consists of five analytic steps, asking the following questions: What problems have emerged from existing policies and regulations? What are the objectives of the proposed regulations? What are the regulatory options? What are the possible impacts? How do the options compare?

Logue & Sniderman on The Case for Banning (and Mandating) Ransomware Insurance

Kyle D. Logue (University of Michigan Law School) & Adam B. Shniderman (University of Michigan Law School) have posted “The Case for Banning (and Mandating) Ransomware Insurance” on SSRN. Here is the abstract:

Ransomware attacks are becoming increasingly pervasive and disruptive. Not only are they shutting down (or at least “holding up”) businesses and local governments all around the country, they are disrupting institutions in many sectors of the U.S. economy — from school systems, to medical facilities, to critical elements of the U.S. energy infrastructure as well as the food supply chain. Ransomware attacks are also growing more frequent and the ransom demands more exorbitant. Those ransom payments are increasingly being covered by insurance. That insurance offers coverage for a variety of cyber-related losses, including many of the costs arising out of ransomware attacks, such as the costs of hiring expert negotiators, the costs of recovering data from backups, the legal liabilities for exposing sensitive customer information, and the ransom payments themselves. Some commentators have expressed concern with this market phenomenon. Specifically, the concern is that the presence of insurance is making the ransomware problem worse, on the following theory: Because there is ransomware insurance that covers ransom payments, and because paying the ransom is often far cheaper than paying the restoration costs and business interruption costs also covered under the policy, there is an increased tendency to pay the ransom — and a willingness to pay higher amounts. This fact, known by the criminals, increases their incentive to engage in ransomware attacks in the first place. And the demand for insurance increases; and the cycle continues.

This Article demonstrates that the picture is not as simple as this story would suggest. Insurance offers a variety of pre-breach and post-breach services that are aimed at reducing the likelihood and severity of a ransomware attack. Thus, over the long-term, cyber insurance has the potential to lower ransomware-related costs. But we are not there yet. This Article discusses ways to help ensure that ransomware insurance is a force for good. Among our suggestions are a limited ban on indemnity for ransomware payments with exceptions for cases involving threats to life and limb, coupled with a mandate that property/casualty insurers provide coverage for the other costs of ransomware attacks. We also explain how a government regulator could serve a coordinating function to help cyber insurers internalize the externalities associated with the insurers’ decisions to reimburse ransomware payments, a role that is played by reinsurers in the context of Kidnap-and-ransom insurance.