Facebook, FTC Settlement on User-Privacy Issues Approved

Facebook skips the fine but faces 20 years of monitoring by the FTC for deceiving users about the privacy of their information.

Social networking giant Facebook and the Federal Trade Commission have reached a resolution following charges that the company deceived its consumers by telling them they could keep their information on Facebook private, while repeatedly allowing it to be publicly shared. The agreement requires Facebook to give its users "clear and prominent notice" and obtain their express consent before sharing personal information beyond the user's agreed-to privacy settings.

Based on the terms of the settlement, Facebook must also conduct privacy audits from an independent third party every two years and maintain a comprehensive privacy program to protect user information. The commission noted Facebook will be subject to civil penalties of up to $16,000 for each violation of the order and that the company is subject to monitoring to ensure compliance with the order. "We are pleased that the settlement, which was announced last November, has received final approval," a spokesman for Facebook said in an email sent to the Los Angeles Times.

The vote to approve the final order was 3-1-1, with Commissioner J. Thomas Rosch dissenting and Commissioner Maureen K. Ohlhausen not participating. Commissioner Rosch's objections related to the extent to which the order would reach the activities of third-party applications downloaded by consumers while using the site. Rosch, in his dissent, questioned whether Facebook's express denial of liability provided "a reason to believe" that the settlement was "in the interest of the public" and expressed his concerns that the final consent order might not "unequivocally cover" the entire Facebook environment.

"The Order broadly prohibits Facebook from misrepresenting in any manner, expressly or by implication, the extent to which it maintains the privacy or security of any information it collects from or about consumers," according to the FTC's statement. "For a company whose entire business model rests on collecting, maintaining and sharing people's information, this prohibition touches on virtually every aspect of Facebook's operations."

The Facebook agreement follows a highly publicized settlement between Google and the FTC, which saw the search engine giant slapped with a $22.5 million fine-the largest FTC fine ever-over charges that it bypassed Safari browser privacy settings that blocked cookies. The FTC said it took action after Google violated a previous settlement with the agency over the same issue. While consumer privacy groups lauded the FTC's decision, the Competitive Enterprise Institute warned the decision sets "a dangerously overbroad precedent" and could adversely affect online startup and Web-based innovation.