The Federal Trade Commission recently announced that it entered into a settlement with Epic Marketplace, Inc., (Epic) an online advertising company, of charges that its "history sniffing" practices violated Section 5 of the FTC Act. The settlement serves as another reminder that companies operating online need to consult legal counsel when drafting privacy policies and regularly monitor those policies to make sure they accurately reflect the company’s information sharing practices.
Epic acted as an intermediary between website owners and advertisers by purchasing advertising space on the owners’ websites and contracting with advertisers to place their ads on those websites. Epic used "cookies" to collect data from consumers who visited websites on which the company had purchased advertising space (Epic Network). Through a merger, Epic acquired a company that engaged in "history sniffing," which involves using a code to determine whether a consumer has previously visited a Web page, based on how the consumer’s Web browser styles the display of the page’s hyperlink.
The FTC alleged that by including the history sniffing code in advertisements it placed on the Epic Network, Epic was able to determine whether someone viewing the advertisement had also previously visited Web pages outside of the Epic Network. Based on the knowledge it obtained on which Web pages a consumer had visited, Epic assigned the consumer to various interest categories and used those categories to send the consumer targeted advertisements.
The settlement bars Epic from engaging in history sniffing and requires it to delete and destroy all data obtained through the practice. It also bars any misrepresentations about Epic’s privacy policies, including about the extent to which data is collected, used, disclosed, or shared, or a software code on a Web page determines if the consumer has previously visited a website.
Ballard Spahr’s Privacy and Data Security Group includes experienced lawyers who help clients navigate the many laws designed to safeguard health, financial, and other private information; counsel clients on compliance, data mining, online marketing, and mobile privacy; and assist clients in responding to security breaches.
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For more information, please contact Consumer Financial Services Group Practice Leader Alan S. Kaplinsky at 215.864.8544 or email@example.com, Consumer Financial Services Group Practice Leader Jeremy T. Rosenblum at 215.864.8505 or firstname.lastname@example.org, John L. Culhane, Jr., at 215.864.8535 or email@example.com, Privacy and Data Security Group Practice Leader Mercedes Kelley Tunstall at 202.661.2221 or firstname.lastname@example.org, or Mark J. Furletti at 215.864.8138 or email@example.com.