FTC Settles U.S.-E.U. Safe Harbor Complaints Against Twelve Companies

by White & Case LLP
Contact

On January 21, 2014, the Federal Trade Commission ("FTC") announced agreements ("Settlements") with twelve companies to settle the FTC’s claims that each of the companies had falsely represented that they were in compliance with the U.S.-E.U. and U.S.-Swiss Safe Harbor Frameworks ("Safe Harbor Program").1 Among the twelve settling companies are Level 3 Communications, LLC, one of the world’s largest internet service providers; Apperian, Inc., a provider of mobile applications for businesses; and PDB Sports, Ltd., the limited partnership that owns the Denver Broncos.2 Participation in the Safe Harbor Program offers a streamlined means for U.S. companies to receive personal data in the U.S. from the E.U. or Switzerland in compliance with foreign data privacy laws.3 The Settlements appear to demonstrate increased interest on the part of the FTC in enforcing Safe Harbor Program requirements, which may be aimed at convincing the European Commission that the Safe Harbor Program is still viable.4 As a result, companies that have elected to participate in the Safe Harbor Program should conduct periodic internal reviews of their compliance and consider setting up internal controls to ensure that such compliance is maintained.

Participation in the Safe Harbor Program is entirely voluntary and is initiated by a company's self-certification of compliance with the Safe Harbor "Privacy Principles."5 The Privacy Principles include notice, choice, onward transfers, access, security, data integrity, and enforcement. The company must also state in a published privacy policy that it complies with the Privacy Principles, and continued participation requires annual updating or reaffirmation of the self-certification letter.6

The Settlements resolve allegations that each of the twelve companies represented in its privacy policies that it was compliant with the Safe Harbor Program, despite having allowed its participation to lapse through failure to recertify.7 The FTC characterized these representations as deceptive practices that violated Section 5 of the FTC Act.8 The Settlements enjoin the companies from misrepresenting their compliance with any governmental or self-regulatory data privacy program for twenty years and impose detailed record-keeping requirements for five years, including maintenance of records for all advertisements or other statements containing representations of privacy program participation and all materials relied upon in preparing such representations.9 If the companies violate the Settlements, the FTC is empowered to assess up to $11,000 per day in monetary penalties.10 The Settlements make clear that companies that have self-certified in the past should ensure that they have properly recertified, or if not, that they have removed any representation of Safe Harbor Program compliance from their privacy policies.

In addition, the Settlements evidence a renewed focus at the FTC on Safe Harbor Program enforcement, arguably in response to recent European Commission criticism that the Safe Harbor Program, as enforced, does not sufficiently protect the privacy rights of E.U. citizens.11 The European Commission has released thirteen recommendations to improve the Safe Harbor Program, calling on U.S. authorities to propose remedies by mid-2014, and may suspend or modify the Safe Harbor Program if it remains unsatisfied.12 Responding to these developments, FTC Chairwoman Edith Ramirez stated in a recent address that the FTC "will continue to make Safe Harbor a top enforcement priority" and that more Safe Harbor Program matters are "in the enforcement pipeline."13

While it is unclear what else the FTC may have planned, pressure on the FTC to enforce the Safe Harbor Program undoubtedly means pressure on companies to properly ensure compliance. The Settlements address misrepresentations regarding participation in the Safe Harbor Program, but the FTC has also, in the past, brought claims addressing substantive violations of Safe Harbor Program requirements against companies including Myspace.14 Thus, companies should take the time now to review their compliance with the Safe Harbor Program and institute controls designed to ensure not only that compliance is maintained, but that company policies and procedures relating to transfers of personal data follow the best practices of companies operating in the E.U.

[1] - Press Release, FTC, FTC Settles with Twelve Companies Falsely Claiming to Comply with International Safe Harbor Privacy Framework (Jan. 21, 2014), available at http://www.ftc.gov/news-events/press-releases/2014/01/ftc-settles-twelve-companies-falsely-claiming-comply (hereinafter, "Press Release").
[2] - Id. The FTC noted in the Press Release that the settling companies "represent a cross-section of industries" and handle a variety of different types of consumer information, including health and employment information.
[3] - See Export.gov, Welcome to the U.S.-EU & U.S.-Swiss Safe Harbor Frameworks, available at http://export.gov/safeharbor/index.asp
[4] - See Viviane Reding, Vice-President, European Commission, "Mass Surveillance is Unacceptable – U.S. Action to Restore Trust is Needed Now," Address before the European Parliament Civil Liberties Committee Hearing on Data Protection and U.S. Surveillance (Dec. 9, 2013), available at http://europa.eu/rapid/press-release_SPEECH-13-1048_en.htm (hereinafter "Reding Address").
[5] - Export.gov, U.S.-EU Safe Harbor Overview, available at http://export.gov/safeharbor/eu/eg_main_018476.asp
[6] - Id.
[7] - See, e.g., Level 3 Communications, LLC, Case No. 142-3028 (F.T.C.) (complaint), available at http://www.ftc.gov/sites/default/files/documents/cases/140121level3cmpt.pdf; Apperian, Inc., Case No. 142-3017 (F.T.C.) (complaint), available at http://www.ftc.gov/sites/default/files/documents/cases/140121apperiancmpt.pdf; PDB Sports, Ltd., Case No. 142-3025 (F.T.C.) (complaint), available at http://www.ftc.gov/sites/default/files/documents/cases/140121denverbroncoscmpt.pdf
[8] - See 15 U.S.C. § 45(a)(1) (prohibiting unfair or deceptive practices in or affecting commerce).
[9] - See Level 3 Communications, LLC, Case No. 142-3028 (F.T.C. Jan. 21, 2014) (agreement containing consent order), available at
http://www.ftc.gov/sites/default/files/documents/cases/140121level3agree.pdf.
[10] - See id. See also Export.gov, Safe Harbor Enforcement Overview, available at http://export.gov/safeharbor/eu/eg_main_018481.asp  
[11] - See Reding Address.
[12] - See Press Release, European Union, Restoring Trust in EU-US Data Flows – Frequently Asked Questions (Nov. 27, 2013), available at http://europa.eu/rapid/press-release_MEMO-13-1059_en.htm 
[13] - Edith Ramirez, Chairwoman, FTC, "Protecting Consumers and Competition in a New Era of Transatlantic Trade," Keynote Address before the Transatlantic Consumer Dialogue, Oct. 29, 2013, available at http://www.ftc.gov/sites/default/files/documents/public_statements/protecting-consumers-competition-new-era-transatlantic-trade/131029tacdremarks.pdf
[14] - Privacy Enforcement and Safe Harbor: Comments of FTC Staff to European Commission Review of the U.S.-EU Safe Harbor Framework, Nov. 12, 2013, available at http://www.ftc.gov/sites/default/files/documents/public_statements/privacy-enforcement-safe-harbor-comments-ftc-staff-european-commission-review-u.s.eu-safe-harbor-framework/131112europeancommissionsafeharbor.pdf

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© White & Case LLP | Attorney Advertising

Written by:

White & Case LLP
Contact
more
less

White & Case LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!