Latest FTC enforcement action shows why it’s so hard to figure out who to trust online

Latest FTC enforcement action shows why it’s so hard to figure out who to trust online
written by Andrea Peterson

The Federal Trade Commission building is seen in Washington on March 4, 2012. (REUTERS/Gary Cameron)

The Federal Trade Commission building is seen in Washington on March 4, 2012. (REUTERS/Gary Cameron)

TRUSTe, a company that is supposed to help consumers figure out which sites to trust online, deceived consumers, the Federal Trade Commission alleged in a complaint disclosed Monday.

Since 1997, TRUSTe  says it has certified the privacy chops of thousands of Web sites — giving them a digital “privacy seal” to display on their sites as a sign that they could be trusted. It claims big names as clients, including McDonald’s and the New York Times.

But the FTC says that the organization failed to conduct annual re-certifications of companies holding TRUSTe privacy seals in over 1,000 cases, despite claiming on its Web site that it conducted such re-certifications yearly. It also says TRUSTe failed to require companies using its seals to update references to the organization’s non-profit status after it became a for-profit company in 2008. 

“TRUSTe promised to hold companies accountable for protecting consumer privacy, but it fell short of that pledge,” said FTC Chairwoman Edith Ramirez in a press release.  “Self-regulation plays an important role in helping to protect consumers.  But when companies fail to live up to their promises to consumers, the FTC will not hesitate to take action.”

The company has agreed to settle charges related to the alleged deception. Under the settlement the company will be prohibited from misleading consumers, report on its activities related to a children’s Internet safety law and other regulation for 10 years, and pay $200,000. TRUSTe did not immediately respond to a Washington Post request for comment.

The FTC is the de facto privacy federal government privacy watchdog, but its powers are primarily related to protecting consumers from deceptive and unfair practices. Monday’s settlement raises even more questions about how much consumers should trust the companies that claim to offer a sense of security online.





The Switch

  • reboation