FTC Issues Proposed Consent Order in Facebook Privacy Enforcement Action
On November 29, 2011, the Federal Trade Commission (FTC or Commission) announced a privacy settlement with Facebook, confirming the established principle that companies which fail to comply with their privacy policies face potential liability. The event serves as a reminder that businesses should periodically review their privacy policies to ensure they reflect current practices.
The Facebook Complaint
The Commission alleged that Facebook violated the FTC Act, which prohibits deceptive and unfair trade practices. The FTC pointed to Facebook's failure to honor consumers' privacy preferences, going so far as to change customers' settings to negate their affirmative privacy choices. Additionally, the agency alleged that Facebook made material misrepresentations regarding:
- The ability of third-party applications (apps) to access a consumer's personal information;
- The extent to which the company shared consumers' personal information with advertisers; and
- The accessibility of photos and videos of consumers who had terminated their accounts. Finally, the FTC alleged that Facebook deceptively stated that it complied with the U.S.-E.U. Safe Harbor Framework.
FTC's Proposed Consent Order
While the proposed consent order does not include a monetary fine, it imposes substantial compliance obligations on Facebook. The company must maintain an elaborate reporting, compliance and assessment framework. The Commission also required Facebook to hire an independent third-party professional biannually for the next 20 years to assess, report and certify that the company's privacy program meets or exceeds the standards specified in the order.
What Does This Mean for Businesses?
In addition, any businesses that have established a presence on Facebook, whether through a page, an app or an advertising arrangement, will need to understand how the FTC consent decree will affect their activities on the Facebook platform.
Wiley Rein law clerk Brandon J. Moss contributed to this article.