The Federal Trade Commission (FTC) announced that the for-profit privacy certification business TRUSTe, Inc. agreed to pay $200,000 to settle allegations of false or misleading statements regarding its Privacy Seal Program. Click here to read the full FTC Press Release.

FTC ALLEGATION: TRUSTE FAILED TO RECERTIFY  1,000 + CASES OVER 7 YEARS. 

Although the Consent Order does not include any admission of fault by TRUSTe, the FTC’s original Complaint included the following allegations:

[TRUSTe] has represented, expressly or by implication, that TRUSTe has recertified annual all companies displaying a TRUSTe Certified Privacy Seal to ensure ongoing compliance with the Program Requirements.

In fact, from 2006 until January 2013, [TRUSTe] did not conduct annual recertifications for all companies holding TRUSTe Certified Privacy Seals. In over 1,000 instances, TRUSTe conducted no annual review of the company’s compliance with applicable Program Requirements.

In my personal opinion, these for-profit privacy certification programs suffer from an inherent conflict of interest and tension, in that they are supposed to police and enforce privacy requirements against the very same customer-companies that are paying them. And strict enforcement risks alienating the customer.

It appears in this case, according to the FTC, that TRUSTe was happy to take its customers’ money, provide them with the Privacy Seal to display on their websites to reassure consumers’ privacy concerns, but failed to ensure that the Privacy Seal in-fact reflected strong privacy practices by the companies displaying the Privacy Seal.

DOES TRUSTE OWE YOUR BUSINESS A REFUND? 

For any business that has paid TRUSTe for participation in the Privacy Seal Program, consider whether TRUSTe failed to perform as it promised, made false promises and representations as to requirements of the Privacy Seal Program, and whether your business received full value of the Privacy Seal Program you paid for? If not, it your business should consider demanding a refund.