Alert: Improper Toolbar Disclosures Considered Deceptive Practice by FTC

In 2012, Upromise, Inc. settled allegations that it violated the FTC Act by offering its users a “TurboSaver Toolbar” – a software download which purportedly “highlighted and identified” partner companies in online search results – without accurately disclosing the scope of its personal data collection practices

Specifically, the FTC alleged that extensive information was unknowingly collected from users and transmitted to the company, including the names of websites visited, links clicked, usernames, passwords, search terms, credit card information, expiration dates, security codes and SSN. According to the Commission, the Privacy Policy was also misleading and security protocols ineffective.

In its complaint, the FTC stated that data collection “occurred in the background as a consumer used the Internet, and there was no way for consumers — without special software and technical expertise — to discover the extent of the data collection.”

Settlement terms included promises to: clearly, conspicuously and accurately disclose and describe data use and collection practices; provide instructions with regard to disabling and uninstalling the toolbar; implement a comprehensive information security program; and obtain third-party assessments and certifications of the toolbar describing specific safeguards and their effectiveness in protecting consumers’ personal information.

Last week, the FTC issued a press release that the membership reward service has been penalized for violating the provisions of the order.

“Upromise once again didn’t disclose to consumers the extent of its data collection, and failed to comply with the FTC’s order to get required privacy assessments,” said Tom Pahl, Acting Director of the Federal Trade Commission’s Bureau of Consumer Protection. “Companies must keep their privacy promises.”

Pursuant to the stipulated order, the company must not violate the 2012 order and must pay a $500,000 civil penalty. Prior to launching a future toolbar, it must have a third-party professional specializing in website design and user experience certify that it has adhered to the order’s disclosure and “express, affirmative” consumer consent requirements.

The company must also obtain advance written approval from the FTC of any required assessment’s scope and design. In addition, it must permanently expire related cookies from consumers’ computers and notify those consumers how to uninstall the toolbar.

KEY TAKEAWAY:  Marketers that collect and/or transmit the personal data of users must prominently and accurately disclose the nature, scope and frequency of such practices. Consumers should be required to provide express, affirmative consent to all material terms, including, but not limited to, how to disable and uninstall toolbars. Reasonable security precautions should be implemented.

Contact an FTC investigation and defense lawyer to discuss the implementation of preventative privacy and data use compliance protocols.

 

HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

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