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Facebook Settles FTC's Privacy Charges

by Glen Shapiro, LawAndTax-News.com, New York

02 December 2011


The social networking service Facebook has agreed to settle United States Federal Trade Commission (FTC) charges that it deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.

The proposed settlement with the FTC requires Facebook to take several steps to make sure it lives up to its promises in the future, including giving consumers clear and prominent notice and obtaining consumers' express consent before their information is shared beyond the privacy settings they have established.

The FTC complaints included that, in December 2009, Facebook changed its website so certain information that users may have designated as private was made public, and did not warn users that this change was coming, or get their approval in advance; and that Facebook represented that third-party applications that users installed would have access only to user information that they needed to operate, whereas the applications could access nearly all of users' personal data.

In addition, Facebook had told users they could restrict sharing of data to limited audiences, but, in fact, such restrictions did not prevent their information from being shared with third-party applications. Additional, Facebook did not certify the security of participating applications, although it claimed to, and promised users that it would not share their personal information with advertisers, while it did so. Facebook also claimed that it did, but did not, comply with the US-EU Safe Harbour Framework that governs data transfer.

The FTC said that its complaints against Facebook are part of the its on-going effort to make sure companies live up to the privacy promises they make to American consumers.

"Facebook is obligated to keep the promises about privacy that it makes to its hundreds of millions of users," said Jon Leibowitz, FTC Chairman. "Facebook's innovation does not have to come at the expense of consumer privacy."

The proposed settlement bars Facebook from making any further deceptive privacy claims, and requires that the company obtains consumers' approval before it changes the way it shares their data and that it has periodic assessments of its privacy practices by independent, third-party auditors for the next 20 years.

Facebook will also be required to prevent anyone from accessing a user's material more than 30 days after the user has deleted his or her account, and to establish and maintain a comprehensive privacy programme designed to address privacy risks associated with the development and management of new and existing products and services.

The FTCC voted to accept the consent agreement package, but its agreement is subject to public comment for 30 days, until December 30, 2011. After that date, the FTC will decide whether to make the proposed consent order final.

In a blog to its users on Facebook’s website, Mark Zuckerberg, co-founder and CEO of Facebook, admitted that it had “made a bunch of mistakes”. For Facebook, the agreement with the FTC means it is “making a clear and formal long-term commitment to do the things we've always tried to do and planned to keep doing - giving you tools to control who can see your information and then making sure only those people you intend can see it”.

The FTC agreement, he added, “formalizes our commitment to providing you with control over your privacy and sharing - and it also provides protection to ensure that your information is only shared in the way you intend. As the founder and CEO of Facebook, I look forward to working with the FTC as we implement this agreement. It is my hope that this agreement makes it clear that Facebook is the leader when it comes to offering people control over the information they share online.”

Generally, and for some time, the FTC has called for industry to develop tools to allow consumers to control how their activities are tracked when they surf the internet. This includes the concept of ‘Do Not Track’ - a universal, one-stop choice mechanism for online tracking, including behavioural advertising.

However, the FTC also continues to encourage the US Congress to enact data security legislation that would impose standards on companies, and require companies, in appropriate circumstances, to provide notification to consumers when there is a security breach. There are, currently, such bills pending in both the Senate and the House of Representatives.

On the other hand, in response to the FTC settlement with Facebook, the Information Technology & Innovation Foundation’s Senior Analyst, Daniel Castro, stated that "the latest action from the FTC highlights the fact the US has a healthy self-regulatory system in place that protects consumers while still allowing for innovation. Rather than impose heavy-handed regulations or engage in expensive and unproductive litigation, policymakers should continue to work in partnership with the private sector to balance privacy with innovation."

TAGS: compliance | business | law | enforcement | internet | legislation | United States | standards | regulation | services

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