Privacy/Security Service ControlScan Settles FTC Charges

On February 25, 2010, the FTC announced a settlement with ControlScan, a company that certifies the privacy and security of online retailers, over charges of misleading consumers. According to the FTC's release, ControlScan's seals promised consumers that it had reviewed sites' information security practices, although ControlScan performed "little or no verification" of the sites' protections. Additionally, the company's seals had a current date stamp, implying ongoing checking, but the company did not review any sites on a daily basis (and some not even weekly).

As part of the settlement, ControlScan is barred from future misrepresentations, must contact its customers about the FTC's actions and request takedown of the misleading seals. The FTC also levied but suspended a judgment of $750,000 against ControlScan, based upon its inability to pay, and ControlScan's founder and former CEO agreed in a separate settlement "to give up $102,000 in ill-gotten gains."

This case demonstrates the FTC's ongoing willingness not only to enforce overall privacy laws, but specifically use its consumer protection power to go after sites and services that misrepresent their privacy-related practices. The Olshan's privacy law attorneys can assist in creating and reviewing privacy policies, data-related business relationships and other legal compliance.

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