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FTC Charges Deceptive Privacy Practices in Googles Rollout of Its Buzz Social Network

Google Inc. has agreed to settle Federal Trade Commission charges that it used deceptive tactics and violated its own privacy promises to consumers when it launched its social network, Google Buzz, in 2010. The agency alleges the practices violate the FTC Act. The proposed settlement bars the company from future privacy misrepresentations, requires it to implement a comprehensive privacy program, and calls for regular, independent privacy audits for the next 20 years. This is the first time an FTC settlement order has required a company to implement a comprehensive privacy program to protect the privacy of consumers’ information. In addition, this is the first time the FTC has alleged violations of the substantive privacy requirements of the U.S.-EU Safe Harbor Framework, which provides a method for U.S. companies to transfer personal data lawfully from the European Union to the United States.

“When companies make privacy pledges, they need to honor them,” said Jon Leibowitz, Chairman of the FTC. “This is a tough settlement that ensures that Google will honor its commitments to consumers and build strong privacy protections into all of its operations.”

According to the FTC complaint, Google launched its Buzz social network through its Gmail web-based email product. Although Google led Gmail users to believe that they could choose whether or not they wanted to join the network, the options for declining or leaving the social network were ineffective. For users who joined the Buzz network, the controls for limiting the sharing of their personal information were confusing and difficult to find, the agency alleged.

On the day Buzz was launched, Gmail users got a message announcing the new service and were given two options: “Sweet! Check out Buzz,” and “Nah, go to my inbox.” However, the FTC complaint alleged that some Gmail users who clicked on “Nah…” were nonetheless enrolled in certain features of the Google Buzz social network. For those Gmail users who clicked on “Sweet!,” the FTC alleges that they were not adequately informed that the identity of individuals they emailed most frequently would be made public by default. Google also offered a “Turn Off Buzz” option that did not fully remove the user from the social network.

In response to the Buzz launch, Google received thousands of complaints from consumers who were concerned about public disclosure of their email contacts which included, in some cases, ex-spouses, patients, students, employers, or competitors. According to the FTC complaint, Google made certain changes to the Buzz product in response to those complaints.

When Google launched Buzz, its privacy policy stated that “When you sign up for a particular service that requires registration, we ask you to provide personal information. If we use this information in a manner different than the purpose for which it was collected, then we will ask for your consent prior to such use.” The FTC complaint charges that Google violated its privacy policies by using information provided for Gmail for another purpose – social networking – without obtaining consumers’ permission in advance.

The agency also alleges that by offering options like “Nah, go to my inbox,” and “Turn Off Buzz,” Google misrepresented that consumers who clicked on these options would not be enrolled in Buzz. In fact, they were enrolled in certain features of Buzz.

The complaint further alleges that a screen that asked consumers enrolling in Buzz, “How do you want to appear to others?” indicated that consumers could exercise control over what personal information would be made public. The FTC charged that Google failed to disclose adequately that consumers’ frequent email contacts would become public by default.

Finally, the agency alleges that Google misrepresented that it was treating personal information from the European Union in accordance with the U.S.-EU Safe Harbor privacy framework. The framework is a voluntary program administered by the U.S. Department of Commerce in consultation with the European Commission. To participate, a company must self-certify annually to the Department of Commerce that it complies with a defined set of privacy principles. The complaint alleges that Google’s assertion that it adhered to the Safe Harbor principles was false because the company failed to give consumers notice and choice before using their information for a purpose different from that for which it was collected.

The proposed settlement bars Google from misrepresenting the privacy or confidentiality of individuals’ information or misrepresenting compliance with the U.S.-E.U Safe Harbor or other privacy, security, or compliance programs. The settlement requires the company to obtain users’ consent before sharing their information with third parties if Google changes its products or services in a way that results in information sharing that is contrary to any privacy promises made when the user’s information was collected. The settlement further requires Google to establish and maintain a comprehensive privacy program, and it requires that for the next 20 years, the company have audits conducted by independent third parties every two years to assess its privacy and data protection practices.

Google’s data practices in connection with its launch of Google Buzz were the subject of a complaint filed with the FTC by the Electronic Privacy Information Center shortly after the service was launched.

The Commission vote to issue the administrative complaint and accept the consent agreement package containing the proposed consent order for public comment was 5-0. Commissioner Rosch concurs with accepting, subject to final approval, the consent order for the purpose of public comment. The reasons for his concurrence are described in a separate Statement.

The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment for 30 days, beginning today and continuing through May 2, 2011, after which the Commission will decide whether to make the proposed consent order final. Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments in electronic form should be submitted using the following web link: https://ftcpublic.commentworks.com/ftc/googlebuzz
and following the instructions on the web-based form. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the respondent has actually violated the law. A consent agreement is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.

Florida Bill That Would Ease Physician/Nurse Practitioner Supervisory Requirements Would Benefit States Health Care Consumers

The staff of the Federal Trade Commission has sent comments to Florida State Representative Daphne Campbell, at her request, regarding House Bill (H.B) 4103, which would remove some of the constraints on the supervisory arrangements between doctors and advanced registered nurse practitioners (ARNPs) that are now required under Florida law. According to the comments, the proposed bill appears to represent a pro-competitive improvement in the law – one that is likely to benefit Florida health care consumers.

H.B. 4103 would rescind certain restrictive supervision requirements for ARNPs and physician assistants in Florida that were adopted in 2006, while retaining the general supervision requirements that predate the 2006 legislation. According to the FTC staff’s comments, the 2006 legislation imposed administrative costs and other restrictions on doctors who supervise ARNPs. By removing some of these restrictions, H.B. 4103 is likely to reduce the costs of basic health care services provided by ARNPs, and some of those cost savings may be passed on to Florida health care consumers. In addition, the bill would make it easier for health care providers to offer basic health care through ARNP-staffed clinics. For those reasons, the FTC staff agrees with the Florida Department of Health, which found that H.B. 4103 “would allow more access to healthcare.”

The Commission vote approving the staff comments was 5-0. They were sent to Florida State Representative Campbell on March 23, 2011. Copies of the comments can be found now on the FTC’s website and as a link to this press release. (FTC File No. V110004; the staff contact is Daniel J. Gilman, Office of Policy Planning, 202-326-3136.)

Copies of the document mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(FYI 17.2011.wpd)

FTC Approves Final Order Settling Charges that Marketer of Children’s Vitamins Made Deceptive Claims about DHA and Brain and Eye Development

Following a public comment period, the Federal Trade Commission finalized an Order settling charges that a major vitamin marketer and its subsidiaries made false and unsupported claims that their Disney and Marvel Heroes line of children’s multivitamins contained a significant amount of DHA (docosahexaenoic acid, an Omega-3 fatty acid) and promoted healthy brain and eye development in children. As part of the settlement in this case, which was first announced in December 2010, NBTY, Inc. and two subsidiaries, NatureSmart LLC and Rexall Sundown, Inc have agreed to pay $2.1 million to provide refunds to consumers who purchased these multivitamins.

The Commission vote approving the final Order was 5-0. (FTC File No. 1023080; the staff contact is Devin Domond, Bureau of Consumer Protection, 202-326-2610.) Public comments on this order can be found here.

Copies of the documents mentioned in this release are available from the FTC’s website at http://www.ftc.gov and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. Call toll-free: 1-877-FTC-HELP.

(NBTY FC)

Toys R Us to Pay $1.3 Million Penalty for Violating FTC Order

Toys “R” Us, Inc. has agreed to pay a $1.3 million civil penalty to settle Federal Trade Commission charges that it violated a 1998 order governing its dealings with its suppliers. The order prohibits Toys “R” Us from urging any supplier to limit supply of products or refuse to sell to discounters. It also bars Toys “R” Us from asking any supplier about its sales to any toy discounter, and requires the company to preserve and maintain records of communications with its suppliers related to its sales and distribution.

The civil penalty announced today comes in response to FTC allegations that between 1999 and 2010, in violation of the 1998 order, Toys “R” Us, through its Babies “R” Us subsidiary, complained to several of its suppliers about the discounts other retailers were providing to consumers, requested information from several of the companies about how they were supplying products to discounters, and failed to keep records of communications with its suppliers.

The alleged practices were prohibited by the 1998 order, which was issued after the FTC found that Toys “R” Us had used its dominant position as a toy distributor to extract agreements from and among toy manufacturers to stop selling the same toys to warehouse clubs. The 1998 order was affirmed by the Seventh Circuit Court of Appeals for the United States.

“This case reaffirms the importance of complying with all aspects of a Commission order,” said Richard A. Feinstein, Director of the Bureau of Competition. “Although we did not find evidence that Toys ‘R’ Us entered into agreements with the suppliers that violated the order, the penalty here underscores the importance of parties complying fully with all of their order obligations.”

In the complaint filed today, the FTC alleges that Toys “R” Us violated the order by complaining to a number of manufacturers about discounting of their baby products at various times between 1999 and 2010, and that these complaints could lead those suppliers to limit supply or refuse to sell their products to toy discounters.

Second, the FTC complaint alleges that at various times between 2000 and 2010, Toys “R” Us requested information from a number of manufacturers about their supply of products to toy discounters, in violation of the 1998 order.

Finally, the FTC alleges that after the order became final, Toys “R” Us did not adopt any specific program or procedure to assure compliance with the requirement that it maintain all records and communications with suppliers related to any aspect of toy sales or distribution. In fact, Toys “R” Us’s practice from December 1998 until at least May 2010 was to delete the email files of employees who left the company, including those it was required under the order to keep, according to the complaint.

The Underlying Case Against Toys “R” Us in 1998

In its administrative complaint issued in May 1996, the FTC charged Toys “R” Us, the nation’s largest toy retailer at the time, with using its power to keep toy prices higher and reduce toy outlet choices for consumers. The FTC alleged that Toys “R” Us extracted agreements from toy manufacturers to stop selling certain toys to warehouse clubs, or to put the toys into more expensive combination packages, so consumers could not obtain lower-priced toys from the clubs or compare prices easily.

In issuing its final decision and order in October 1998, the FTC upheld the initial decision of an Administrative Law Judge who found that Toys “R” Us had used its dominant position as a toy distributor to extract agreements from and among toy manufacturers to stop selling the same toys that they sold to warehouse clubs, such as Costco. The FTC opinion stated that Toys “R” Us wanted to prevent consumers from comparing the price and quality of products in the warehouse clubs to the price and quality of toys displayed in its stores, thereby reducing the effectiveness of the clubs as competitors. Toys “R” Us appealed the Commission Decision and Order to the Seventh Circuit Court of Appeals, where the Commission prevailed. The Commission’s order became final on December 18, 1998, and Toys “R” Us’s appeal was denied on August 1, 2000.

The Commission vote approving the complaint and consent judgment settling the court action was 5-0. Copies of the complaint and judgment can be found on the FTC’s website and as a link to this press release. The FTC filed the documents in the U.S. District Court for the District of Columbia on March 29, 2011.

The FTC’s Bureau of Competition works with the Bureau of Economics to investigate alleged anticompetitive business practices and, when appropriate, recommends that the Commission take law enforcement action. To inform the Bureau about particular business practices, call 202-326-3300, send an e-mail to [email protected], or write to the Office of Policy and Coordination, Room 394, Bureau of Competition, Federal Trade Commission, 600 Pennsylvania Ave, N.W., Washington, DC 20580. To learn more about the Bureau of Competition, read “Competition Counts” at http://www.ftc.gov/competitioncounts.

(FTC File No. 0910082; D09278)
(Toys R Us.final)

Statement by FTC Bureau of Competition Director Richard Feinstein on the Court Ruling Granting a Preliminary Injunction in the ProMedica/St. Luke’s Hospital Matter

For Release

March 29, 2011

Federal Trade Commission Bureau of Competition Director Richard Feinstein issued the following statement regarding the U.S. District Court ruling today granting the FTC’s request for a preliminary injunction in this case, pending a full administrative trial on the merits of ProMedica Health System Inc.’s proposed acquisition of St. Luke’s Hospital:

“We are gratified that Judge Katz has issued a preliminary injunction to preserve competition between ProMedica and St. Luke’s. In a time of rapidly escalating health care costs, we believe that consumers in Lucas County, Ohio, are the true beneficiaries of this decision.”

Contact Information

MEDIA CONTACT:

Office of Public Affairs
202-326-2180

FTC Hosts International Consumer Protection Forum

In an ongoing effort to combat cross-border fraud and promote global consumer protection, the Federal Trade Commission will host officials from nine Latin American countries for a “Consumer University” training session to discuss consumer protection issues and enforcement strategies. FTC experts and representatives from the Food and Drug Administration, the Consumer Product Safety Commission, the Department of State, and the Pan American Health Organization will discuss their approaches to meeting consumer protection challenges, and the nine visiting agencies will share their experiences.

The week-long training session will take place from March 28 to April 1 and focus on health-related consumer matters such as deceptive food advertising, childhood obesity, “miracle” health claims, and dietary supplements. Topics also will include consumer privacy, cross-border dispute resolution, product safety, food labeling, and consumer education.

This conference is a part of a larger project funded by the U.S. Agency for International Development involving the Central American Free Trade Agreement countries, plus Panama, Peru, and Colombia. This initiative strengthens ties between the FTC and Latin American consumer protection and competition agencies, increasing cooperation in law enforcement and policy work.

“Consumers throughout the Americas are being targeted by scammers with cross-border schemes who seek to deceive all members of our communities, so regional law enforcement cooperation is a vital part of the FTC’s consumer protection agenda,” said Commissioner Edith Ramirez, who opened the conference with the keynote address.

This week’s Consumer University will include agency officials from Costa Rica, Colombia, the Dominican Republic, Honduras, El Salvador, Guatemala, Nicaragua, Panama, and Peru.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.

(Consumer University FYI)

FTC Charges Cancer Cures Marketers with Violating Commission Order

At the Federal Trade Commission’s request, the U.S. Department of Justice has asked a federal district court to impose civil penalties upon the herbal products company Daniel Chapter One (DCO) and its principal, James Feijo, for allegedly violating an FTC Order. The civil penalty action also seeks a preliminary injunction to stop DCO and Feijo from continuing to make deceptive claims on the company’s daily radio show and website about the supposed cancer-fighting properties of its supplements, and to require DCO and Feijo to send a notice to purchasers explaining the FTC’s findings that the advertisements were unsubstantiated, as required by the FTC Order.

The complaint against DCO and Feijo stems from a lawsuit that began in September 2008 as part of Operation False Cures, a law enforcement sweep aimed at peddlers of phony cancer remedies.

Daniel Chapter One and Feijo deceptively advertised that four dietary supplements – BioShark, 7 Herb Formula, GDU, and BioMixx – inhibit tumor formation or growth, eliminate tumors, treat or cure cancer, or heal the effects of radiation or chemotherapy. An administrative trial took place in April 2009, and the Administrative Law Judge found that the defendants were making deceptive claims. The Commission upheld the ALJ’s initial decision in December 2009.

As part of the FTC Order issued in December 2009, Daniel Chapter One and Feijo were required to stop making the deceptive claims, and to send a notice to purchasers explaining the FTC’s findings that advertising claims for the supplements were unsubstantiated, and that consumers should consult with health care providers before using any herbal product, to ensure that all aspects of their medical treatment work together.

In March 2010, DCO and Feijo petitioned the U.S. Court of Appeals for the District of Columbia Circuit to review the FTC ruling that the defendants were making deceptive claims. In December 2010, the appellate court ruled in favor of the FTC. The Court of Appeals found that the Commission did not exceed its authority by requiring a reasonable basis for the defendants’ claims, and that the defendants’ legal arguments based on the right to freedom of religion were “wholly without merit.” The appellate court finalized its denial of the appeal on February 28, 2011.

The new civil penalty complaint, originally filed on August 13, 2010 by the Department of Justice on the FTC’s behalf, seeks civil penalties from the defendants for violating the FTC Order. The complaint alleges that DCO and Feijo violated the Order by promoting cures for cancer and other tumors without reliable scientific evidence to substantiate their claims, and by ignoring provisions requiring that a corrective notice be sent to past purchasers.

The U.S. District Court for the District of Columbia had stayed the contempt case pending resolution of the defendants’ appeal, and then lifted the stay on March 7, 2011. The DOJ therefore resumed its efforts and refiled its motion for a preliminary injunction to stop the defendants from continuing to violate the Order on March 11, 2011.

The Commission vote to refer the civil penalty complaint to the Department of Justice for filing was 5-0.

NOTE: The Commission refers a complaint to the DOJ for filing when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. “Like” the FTC on Facebook and “follow” us on Twitter.

(FTC File No. DO9329)
(Daniel CO)

FTC Finalizes Settlement with Data Broker Agency Charged Privacy Pledges Were Deceptive

Following a public comment period, the Federal Trade Commission has accepted a final settlement with an online data broker that charged consumers $10 based on the false promise that it could “lock their records” so that others could not see or buy them. The FTC charged that its claims were deceptive and violated federal law. The settlement, first announced September 22, 2010, requires that the broker, US Search, refund the fees it charged to nearly 5,000 consumers, and it bars misrepresentations about the effectiveness of any service that claims to remove information about consumers from the broker’s website.

The Commission vote to accept the settlement as final was 5-0, with Commissioner Julie Brill issuing a separate concurring statement. In her concurring statement, Commissioner Brill said industry should consider providing consumers withmeaningful notice about information brokers’ practices, a reasonable means to access and correct consumers’ information, and a reasonable mechanism to opt out of these databases.

Public comments on this order can be found here.

FTC Withdraws Appeal Seeking a Preliminary Injunction to Stop LabCorp’s Integration With Westcliff Medical Laboratories

The Federal Trade Commission has withdrawn its appeal of a court order denying a preliminary injunction regarding Laboratory Corporation of America’s 2010 acquisition of Westcliff Medical Laboratories, Inc. Although LabCorp consummated the acquisition in June 2010, the FTC was seeking the federal court injunction to prevent LabCorp from integrating the companies pending the outcome of administrative litigation. The FTC also has withdrawn the matter from administrative adjudication – a step that stops the trial proceedings, but does not conclude the case.

In its administrative complaint, issued on December 1, 2010, the FTC charged that LabCorp’s acquisition of Westcliff, which was completed June 16, 2010, violated antitrust laws and would lead to higher prices and lower quality in the Southern California market for the sale of clinical laboratory testing services to physician groups. The complaint also alleged that the acquisition would leave only two significant laboratories in Southern California competing to provide critical testing services to most physician groups.

The Commission vote authorizing the withdrawal of the pending appeal was 4-1, with Commissioner Julie Brill dissenting and issuing a separate statement. In her dissenting statement, Commissioner Brill discussed “important principles of merger law” at issue in the case that, in her view, “merit an appeal.”

The Commission vote approving the order withdrawing the matter from administrative adjudication was 5-0. (FTC File No. 1010152, Docket No. 9345; the staff contact is John F. Daly, Office of the General Counsel, 202-326-2244; see press release dated December 1, 2010.)

(FYI 15.2011.wpd)

FTC Approves Monitor Trustee and Agreement to Ensure Polypore’s Compliance with the Commission’s Final Order

The Federal Trade Commission has approved the appointment of a monitor trustee and a related agreement to ensure that Polypore International, Inc. fully complies with a 2010 Commission administrative order to divest the assets of rival firm Microporous Products L.P., which it acquired in 2008.

The FTC’s administrative complaint, issued in September 2008, challenged Polypore’s consummated acquisition of rival battery separator manufacturer Microporous, and other conduct by Polypore, as anticompetitive and in violation of the federal antitrust laws. According to the complaint, the consummated transaction led to decreased competition and higher prices in several North American markets for battery separators, a key component in flooded lead-acid batteries.

In March 2010, an administrative law judge upheld the FTC’s complaint, ruling that the acquisition was anticompetitive and ordered Polypore to divest Microporous to an FTC-approved buyer. Polypore appealed the ALJ’s ruling and it was upheld by the full Commission in a decision and order issued in November 2010, which became final on January 28, 2011. Although Polypore has appealed the Commission’s order to the U.S. Court of Appeals, all provisions of the order except for the divestiture provisions are final and effective during the appeal.

Under the FTC’s order, Polypore is required to retain a monitor trustee, acceptable to the agency, by March 1, 2011, to ensure that it complies with all of the requirements of the order, including that it maintain the Microporous assets pending divestiture, allow certain customers to reopen their contracts, and fully divest the Microporous assets if the FTC decision and order is upheld on appeal. Polypore has entered into an agreement with James L. Schaeffer and J.L. Schaeffer & Associates, LLC to serve as the monitor in this matter The FTC has approved the appointment of Mr. Schaeffer and J.L. Schaeffer & Associates, LLC as the monitor trustee and has approved the agreement.

The FTC vote approving the appointment of the monitor trustee and related monitor trustee agreement was 5-0. A copy of the agreement can be found on the FTC’s website and as a link to this press release. (FTC Docket No. D09327; the staff contact is Elizabeth A. Piotrowski, Bureau of Competition, 202-326-2623; see press release dated December 13, 2010.)

(FYI 14.2011.wpd)

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