FTC Nets $500,000 Settlement for Alleged Consent Order Violation Related to Online Data Collection Practices

by BakerHostetler
Contact

On March 17, 2017, the Federal Trade Commission (FTC) announced that it had reached a $500,000 settlement with Upromise, a membership reward service aimed at families saving for college. The FTC had alleged that Upromise violated a 2012 FTC consent order by failing to make required disclosures about its data collection and use practices and not obtaining third-party assessments as agreed. This settlement illustrates not only the FTC’s continued focus on online data privacy and security issues, but also the Commission’s interest in ensuring that companies adhere to the terms of their settlement agreements.

Background and 2012 Order

Upromise offers a loyalty program that is free to join and provides credit toward college savings plans, or toward paying down student loans for members who make eligible purchases from partner businesses.

In 2012, the FTC reached a settlement with Upromise following charges that the company was using its “TurboSaver” toolbar to collect consumers’ personal information without adequately disclosing the extent of the collection, then transmitting that data over the internet in an insecure manner. In the 2012 Order, Upromise agreed to (1) clearly disclose its toolbar data collection practices, including the types of information collected and how data was being used; (2) obtain affirmative consent from users prior to collecting their data; and (3) notify consumers who had previously downloaded the toolbar about the data collection and provide instructions to disable the toolbar.  Upromise was also required to establish a comprehensive information security program and obtain biennial third-party security assessments for 20 years.

Complaint and Proposed Order

In its March 2017 Complaint, the FTC alleged that following the 2012 Order, from March 2013 to January 2016, Upromise violated the terms of the Order by failing to clearly disclose its data collection and use practices to consumers who downloaded its RewardU toolbar. Specifically, the FTC argued that Upromise’s disclosures were confusing to consumers and that its security assessment of the toolbar was inadequate.

The Stipulated Order prohibits Upromise from violating the 2012 Order and imposes a $500,000 civil penalty. Further, Upromise must:

  • Obtain an evaluation and report from a qualified, objective, independent third-party professional that specializes in website design of its practices regarding informed user consent to data collection and use, should it launch a future version of the toolbar;
  • Obtain written approval from the FTC of its security assessment’s scope and design relating to the future toolbar; and
  • Permanently expire any RewardU-related cookies it previously placed, and notify all consumers who downloaded the RewardU toolbar to uninstall the toolbar with instructions on how to effect the removal and delete associated cookies.

The Order also imposes additional compliance reporting, recordkeeping, and monitoring requirements.

It’s no secret that the FTC has become increasingly active in scrutinizing how companies are collecting, using, and securing consumer data online. This Order emphasizes that repeated violations can result in significant penalties, and that the FTC is keeping a watchful eye on companies it has previously called out for alleged data protection failures.

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.

© BakerHostetler | Attorney Advertising

Written by:

BakerHostetler
Contact
more
less

BakerHostetler 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):
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.