The Federal Trade Commission announced that it is settling with Sears Holdings Management Corporation (owned by Sears, Roebuck and Company and Kmart Management Corporation) for Sears' alleged failure to adequately disclose the scope of its downloadable tracking software application. The FTC’s administrative complaint alleges that Sears' failure was deceptive and violates the FTC Act.

According to the FTC’s complaint, Sears invited certain consumers of the sears.com and kmart.com websites to become members of the “My SHC Community.” Sears solicited these consumers to “participate in exciting, engaging, and on-going interactions – always on your terms and always by your choice" and paid consumers $10 each to participate. These consumers were asked to download “research” software to confidentially track their “online browsing”; however, the FTC alleges that the software would also monitor consumers’ online secure sessions – including sessions on third parties’ websites – and collect information transmitted in those sessions, such as the contents of shopping carts, online bank statements, drug prescription records, video rental records, library borrowing histories, and the sender, recipient, subject, and size for web-based e-mails. The software would also track some computer activities that were not related to the Internet. Sears did disclose the full extent of the information that the software tracked; however, the disclosure was in a lengthy user license agreement, only available at the end of the multi-step registration process.

Under the proposed settlement, Sears needs to destroy all information previously collected and adhere to certain regulations should it use tracking software again in the future.

The FTC's administrative complaint and proposed settlement will be subject to public comment for 30 days, continuing through July 6, 2009, after which the Commission will decide whether to make it final. To file a public comment, please click on the following hyperlink: http://www.ftc.gov/os/2009/06/0823099publiccomment.pdf and follow the instructions at that site.