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Pokémon Go distractions can cause all kinds of havoc

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Businesses should review and reaffirm provisions of their cyber insurance to avoid potential liability from a series of issues raised by the Pokémon Go craze.

While the popularity of the augmented reality smartphone game, developed by San Francisco-based Niantic Inc. in partnership with Kyoto, Japan-based Nintendo Co. Ltd. and introduced in July, will inevitably fade, experts say it almost certainly will be followed by other games that may raise even greater risks.

News reports have described many cases of often-unwelcome crowds gathering to play the game on or near private property, with distracted users often wandering into company-owned property.

Experts say the game’s potential risks include malware, loss of private data, property damage, personal injury and workers compensation claims.

At this early stage, “no one really knows for sure what types of liability will arise from it, if any,” said James S. Carter, of counsel at Blank Rome L.L.P. in Washington, who recommends that firms examine their insurance policies to be sure they have appropriate coverage in the event of claims. Companies can take other steps to minimize potential liabilities.

The game, available free to smartphone users, encourages participants to capture images of “monsters.” It displays the monsters’ locations on maps that become in-game locations of interest, including “gyms” that let players battle train their Pokémon and challenge rival teams, which could be on businesses’ property.

Experts say the game is particularly problematic for many firms that have bring-your-own-device-to-work policies. Some apps that purport to help to players contain malware, said Alan Brill, senior managing director at Kroll Associates Inc. in Secaucus, New Jersey.

“If people are using these same devices they use for their corporate email, which is pretty common in a (bring-your-own-device) world, there’s a much greater risk these apps can open people up to cyber attacks,” said Thomas Reagan, Marsh L.L.C.’s New York-based cyber practice leader.

Andrew Laubmeier, senior broker in Aon P.L.C.’s financial services group in Chicago, said one initial source of worry was that most people who downloaded the game did so through their Google email accounts, which required agreeing to provide Niantic with full access to any information in those accounts.

While the provision later was narrowed considerably, “the underlying concern is still there,” Mr. Laubmeier said.

Philippe Weiss, Chicago-based managing director of Seyfarth Shaw at Work, the compliance training and consulting services affiliate of Seyfarth Shaw L.L.P., said businesses also may be liable for game participants who “wander into facilities where they may endanger themselves.”

Workers could also hurt themselves while playing the game during breaks, potentially raising workers comp issues, experts say. “Both employees and third parties are racing all over the landscape in search of Pokémon,” which creates possible liability issues if they get hurt, said Mr. Weiss.

“We have an agricultural client, and they had an issue because someone was chasing one of these Pokémon creatures and almost fell into a grain elevator,” Mr. Weiss said. Another report had an employee leaning out a window to get better reception as he played the game.

Privacy is a risk was well. When the game is in video mode, for example, smartphones could pick up data in legal files or personally identifiable information, experts say.

Experts say the game can also create workers comp issues as strangers come on companies’ premises uninvited and injure workers.

You can have “all kinds of people descending on your office unexpectedly,” leaving the company unable to protect employees’ safety, said Jeffrey Adelson, general managing partner at Adelson, Teslan, Brundo, Novell & Jimenez P.C. in Santa Anta, California.

Having policies in place to address these issues “at the very least would provide the company with evidence that it had thought about it and tried to give people advice to protect themselves,” Mr. Brill said.

Meanwhile, no one expects Pokémon Go to be the last word in augmented reality games.

Anthony Dagostino, executive vice president and FINEX cyber practice leader at Willis Towers Watson P.L.C. in New York, said he is concerned gaming companies will push the envelope further, making games “bigger and better and more exciting to people, which can be more dangerous at the same time.”