FTC says web privacy firm deceived consumers about recertification program

The Federal Trade Commission building in Washington, D.C.

The Federal Trade Commission building in Washington, D.C.

TRUSTe, the provider of privacy certifications for online businesses skipped follow-up audits of some companies that had received its seal and allowed it to be falsely portrayed as a nonprofit corporation, even after it became a for-profit business in 2008, the Federal Trade Commission alleged in a settlement announced Monday.

The San Francisco-based TRUSTe firm represents itself as a notable independent authority on consumer privacy. But the Federal Trade Commission said that the company was unsuccessful in checking whether they were indeed meeting standards for safeguarding customers’ information.

“Seals and certifications are persuasive to consumers,” the FTC said in a blog post, after announcing Monday that TRUSTe had agreed to a legal settlement in the case. “So it’s important that representations conveyed by those remarks are truthful.”

As part of the legal settlement TRUSTe agreed to pay $200,000 to the FTC and file detailed reports on some of its practices in the future. CEO Chris Babel, in the company blog post said that the processes did not live up to their own standards but typified the problems as isolated. In a majority of cases the company carried out compliance reviews, he said.

From NFL.com to the messaging service WeChat, the company’s privacy seal is displayed by various popular websites and mobile apps. TRUSTe also certifies those products as cloud computing services and downloadable software.

According to the FTC, from 2006 to January 2013 TRUSTe failed to conduct more than 1,000 annual privacy checks on some of the companies it had already granted a TRUSTe seal, although the firm claimed to review companies’ privacy practices on an annual basis.

“TRUSTe promised to hold companies accountable for protecting consumer privacy, but it fell short of that pledge,” FTC Chairwoman Edith Ramirez said in a statement. While TRUSTe told clients that it was no longer a nonprofit, she added, it did not make sure that clients changed the way they described TRUSTe’s service.

The dereliction to carry out follow-up reviews involved companies that had signed several year contracts with TRUSTe. Babel said the huge majority were reviewed every other year. Currently TRUSTe requires companies to withdraw any reference to TRUSTe’s former nonprofit status before they can be re-certified, Babel added.

According to the settlement, future violations could be subject to civil penalties. FTC requires TRUSTe to make detailed yearly reports about the measures it takes to ensure clients comply with standards for a special certification that TRUSTe provides for websites and apps that gather data from children under 13.

Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

Recent Posts

Moderna vaccine more effective than Pfizer, study says

Moderna vaccine more effective than Pfizer, study says

Moderna’s Covid-19 vaccine does a slightly better job of preventing coronavirus-related hospitalizations and emergency department visits.
2 days ago
iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

iPhone 13 and iPhone 13 Pro: Specifications, Release Date, Features and much more

Apple iPhone 13 Pro and iPhone 13 Pro Max can be a hit with its ever new technology A15 Bionic chip and other cool profound features.
3 days ago
Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

Total signs $27 billion energy deal to fund 1-gigawatt solar power plant

The French oil major, Total, has signed a $27 billion deal to fund a 1-gigawatt solar power plant, and boost oil and gas production in the Middle-East region.
3 days ago
PMI seals $1.51 billion takeover of British inhalation specialist Vectura

PMI seals $1.51 billion takeover of British inhalation specialist Vectura

Philip Morris International (PMI) acquires a 22.6% stake in British inhalation specialist Vecutra closing in on the controversial $1.51 billion takeover.
4 days ago
Apple co-founder Steve Wozniak joins the space race

Apple co-founder Steve Wozniak joins the space race

Wozniak, popularly known as “Woz”, is setting up a private space company with Ripcord co-founder Alex Fielding. In a tweet, Wozniak shared a promotional video for the company c
5 days ago
Auto chip shortage affects its production; factory closures rise

Auto chip shortage affects its production; factory closures rise

Automakers like Peugot, Ford, and Toyota are on the run to regain high-margins from the auto chip making since the pandemic and weather disasters have taken over.
5 days ago