The Federal Trade Commission (FTC) and TRUSTe Inc. entered into a settlement agreement Monday over the FTC’s allegations that the internet privacy certifier deceived consumers about its privacy seal recertification program and allowed its customers to falsely advertise it as a nonprofit entity. Under the settlement, TRUSTe will pay a $200,000 fine and stop making certain claims.
TRUSTe provides seals to businesses that meet requirements for consumer privacy programs that it administers. TRUSTe seals represent to consumers that businesses’ privacy practices are in compliance with specific privacy standards like the Children’s Online Privacy Protection Act (COPPA) and the U.S.-EU Safe Harbor Framework. In its complaint against Truste, the FTC had alleged that from 2006 until January 2013, TRUSTe failed to conduct annual recertification of companies holding TRUSTe privacy seals in over 1,000 cases, despite its website statements that companies holding TRUSTe Certified Privacy Seals receive recertification every year.
The FTC complaint also alleged that since TRUSTe became a for-profit corporation in 2008, it failed to require companies using TRUSTe seals to update references to the organization’s non-profit status. Before converting from a non-profit to a for-profit, TRUSTe provided clients model language describing TRUSTe as a non-profit for use in their privacy policies.
In addition to the fine, the settlement prohibits TRUSTe from making misrepresentations about its certification process or timeline, and misrepresenting its corporate status or whether an entity participates in its program. In addition, TRUSTe must not provide other companies or entities the means to make misrepresentations about these facts, such as through incorrect or inaccurate model language. The settlement also requires the company in its role as a COPPA safe harbor to provide detailed information about its COPPA-related activities in its annual filing to the FTC, as well as maintaining comprehensive records about its COPPA safe harbor activities for ten years.