Federal Trade Commission Reaffirms Commitment to Enforce EU-US Privacy Shield

by Dechert LLP

Dechert LLP

The U.S. Federal Trade Commission (FTC) recently settled enforcement actions against three companies accused of misleading consumers about their participation in the European Union-United States Privacy Shield framework, which allows companies to transfer consumer data from EU member states to the United States in compliance with EU law. These actions – the first ones taken by the FTC since the Privacy Shield framework went into effect in July 2016 – reaffirm the FTC’s commitment to enforcing U.S. companies’ stated policies concerning Privacy Shield.

EU-U.S. Privacy Shield

The Privacy Shield framework allows U.S. companies to transfer data outside the EU in a manner consistent with EU law. Companies subject to the jurisdiction of either the FTC or the U.S. Department of Transportation may take advantage of the protections offered by Privacy Shield. To join Privacy Shield, an eligible company must self-certify to the U.S. Department of Commerce that it complies with a set of principles and related requirements that have been deemed by the European Commission as providing adequate privacy protection. Companies are required to re-certify every year to retain their status as current members of Privacy Shield.  

False claims of participation in Privacy Shield are subject to enforcement actions by the FTC as deceptive acts or practices under Section 5 of the FTC Act. Within two months of President Trump taking office, acting FTC Chairman Maureen Ohlhausen reiterated the agency’s intention to vigorously enforce the Privacy Shield framework.

(For more information on the Privacy Shield framework, see EU and US Reach Agreement in Principle on Successor to ‘Safe Harbor’ for Trans-Atlantic Data Transfers.)

FTC’s Privacy Shield Cases

The FTC recently took action against three U.S. companies, alleging that they violated the FTC Act by falsely claiming participation in the Privacy Shield framework. The settling parties were a human resources software company, a printing services provider, and a firm that manages real estate leases for wireless companies. Despite the parties’ claims of Privacy Shield participation, each of the three companies had initiated but failed to complete the certification process for Privacy Shield, according to the FTC complaints.  

The three companies entered into consent orders with the FTC, which prohibit them from making representations about their membership in any privacy or security program sponsored by the U.S. government or any other self-regulatory or standard-setting organization. The orders, which also include various reporting and compliance measures, have a term of twenty years.

In addition to Privacy Shield, the FTC alleged that one of the three companies had falsely claimed participation in the Swiss-U.S. Privacy Shield framework, which went into effect in April 2017 and is identical to the EU-U.S. framework. Earlier this year, the FTC also initiated enforcement actions involving false claims of participation in the Asia-Pacific Economic Cooperation Cross-Border Privacy Rules. Although each of these programs is voluntary, like any other representation a company makes, claims about participation in these privacy programs must be truthful.

The FTC cases were the first ones brought by the agency to enforce Privacy Shield, which replaced the EU-U.S. Safe Harbor framework in July 2016. The FTC’s previous actions enforcing Safe Harbor involved false claims of participation by companies that had never participated, had participated at one time, or failed to comply with the annual self-certification requirement under Safe Harbor. (See Safe Harbor in a Storm.)

Key Takeaways

  • The FTC will continue to hold companies accountable for the promises they make to consumers regarding their privacy policies, including participation in Privacy Shield.
  • Companies participating in Privacy Shield should re-evaluate their privacy procedures and policies regularly to ensure compliance with the various requirements of the Privacy Shield framework.
  • Once a company initiates the Privacy Shield certification process, it must complete that process to claim participation in the Privacy Shield framework.
  • Companies looking to participate in Privacy Shield or a similar privacy program should consult counsel to ensure the program is the best option for their particular business needs.

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.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP

Dechert 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.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

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.


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.