Crowdsourcing: Understanding the Risks

Innovation is the word to live by in the modern business world. Crowdsourcing has for years been at the forefront of innovation. According to a paper by Marc A. Lieberstein, Ashford Tucker, and Andrea K. Yankovsky, being on the cutting edge of innovation also means entering an environment ripe with potential legal issues and challenges. The authors question exactly what one should do when using crowdsourcing. Do you tell your clients? To fully understand the risks of crowdsourcing, one must first understand exactly what crowdsourcing is.   According to the paper, crowdsourcing can be grouped into four groups.

    <li>Crowd voting

  • Crowd creation
  • Crowd wisdom
  • Crowd funding

Crowd voting uses computer algorithms to gauge the popularity of an individual, an organisation, service, object, and so on. Crowd creation refers to a group of people being asked to do something. This could be completing an action or working out a problem with in a system. As the name would imply, crowd wisdom “involves capitalizing on the diverse knowledge of a group to solve problems, predict future outcomes, or guide corporate strategy.” Finally, crowd funding gives financial incentives to individuals or groups in the hopes of turning that money into something greater. With each individual type of crowdsourcing comes a new type of risk. Learning what the risks are before engaging in crowdsourcing is crucial:   As noted above, uses of consumer data in crowdsourcing projects can raise issues pertaining to the consumer’s right of privacy under state law, if for example consumers are surprised to learn that their personally identifiable data has been used or shared. Similarly, issues can arise when a company’s online privacy policy and otherwise applicable terms do not conspicuously and expressly address the uses to be made of consumer data or obtain necessary consent from consumers. In addition, some states recognize a right of publicity that grants an individual a right to monetize his or her name and likeness, and this right can create similar issues if a company crowdsources, for example, uncleared images or recordings of individuals. And of course, any crowdsourced competition likely abuts regulations pertaining to sweepstakes or gaming, another area of the law that must be considered by the organizer of such projects. In short, there is certainly much to be gained from crowdsourcing. However, one must be extremely mindful of the risks involved. With much crowdsourcing taking place online, new regulations must be considered that before were nonexistent. Still, you should not let the fear or risks of crowdsourcing deter you from making it work for your organisation. With crowdsourcing comes innovation, and with innovation comes success.

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