Posted by Alexander Hanff on November 17, 2014.
Today the Federal Trade Commission (FTC) issued a press release outlining details of a settlement reached with TRUSTe on the grounds that the “company failed to conduct annual recertifications, facilitated misrepresentation as non-profit”. The FTC goes on to accuse TRUSTe of not following through on annual recertifications of companies who obtained their privacy seal from 2006 to 2013 in an undisclosed number of incidences described only as “over 1000 incidences”. Furthermore the FTC claim that TRUSTe facilitated misrepresentation as a non-profit by not requiring companies using their privacy seal on their web sites to clarify that they had become for-profit in 2008.
FTC Chairwoman Edith Ramirez is quoted as stating “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.” but one really has to question how many times self-regulation is going to be found wanting before the regulators finally accept that self regulation in a multi-billion dollar industry is simply impossible, unworkable and will never serve to protect consumers because the goal of the industry is to protect profits.
For the past 8 years I have repeatedly warned regulators, politicians, consumers and corporations that they should not trust TRUSTe privacy seals as they are nothing but an industry rubber stamp. Back in 2009 at the BEUC conference in Brussels, Vice President Vivian Reding of the European Commission acknowledged that companies were hiding behind popular privacy seals and that they should not be trusted. Yet it has taken 5 years for any regulatory action to prevail and the consequences for TRUSTe are truly laughable.
The FTC has fined TRUSTe a mere $200 000.00 USD for the “over 1000 incidences” which no doubt affected hundreds of millions of online consumers including children. The FTC have fined TRUSTe less than $200 per instance (and that is just the known instances) whereas TRUSTe are likely to have profited to the tune of millions of dollars from the same cases. Basically, TRUSTe have been rewarded by the FTC for their misleading practices by being permitted to keep the vast profits they obtained from their deception.
Frankly, I am struggling to see how they have not been charged for fraud, given that the revenues were obtained via deception (maybe not deception of the clients, but certainly deception of the public) and find it outrageous that the FTC could be so lenient in such a case. Now, what about other regulators across the globe – will we see action against TRUSTe from them?
One thing is absolutely certain though – the FTC have confirmed that you cannot trust TRUSTe.Submitted in: Alexander Hanff, News |