On the 17th November 2014 the Federal Trade Commission (FTC) issued a press release confirming that TRUSTe Inc, a major provider of privacy certifications for online businesses, had settled FTC charges that it had lied to consumers about its re-certification program for company's private practices, as well as perpetuating its misrepresentation as a non-profit entity.
At a time when the UK and the EU are debating the need for privacy seals and trust marks, the TRUSTe debacle highlights that certification schemes and seal programs are only as valuable as the robustness of the credentials of the scheme providers.
TRUSTe provides seals to businesses who have met audit and policy requirements with a view to assuring consumers that those certified businesses are in compliance with specific US privacy standards such as the US-EU Safe Harbor Framework, the US-Swiss Safe Harbor Framework and the Children's Online Privacy Protection Act (COPPA).
For many years, TRUSTe has been an integral part of these specific privacy standards and it is therefore a concern that TRUSTe's assurances and representations have been both deceptive and the misrepresentation of the facts.
In commenting on the FTC charges, FTC chairwoman Edith Ramirez said "TRUSTe promised to hold companies accountable for protecting consumer privacy, but it fell short of the pledge. Self-regulation plays an important role in helping to protect consumers. But when companies fail to live up to their promises to consumers, the FTC will not hesitate to take action."
In addition, whilst TRUSTe was originally set up as a 'not-for-profit' corporation when it changed its status to a 'for profit' corporation in 2008, it failed to ensure that companies using the TRUSTe seal updated their reference to the organisations status as being 'for profit'.
The proposed Settlement Order announced on 17th November prohibits TRUSTe from making future misrepresentation about its seal program as well as misrepresenting its corporate status. Furthermore the Settlement requires TRUSTe to provide detailed information about its COPPA related activities in its annual filings to the FTC as well as maintaining records about its COPPA Safe Harbor activities for 10 years.
The financial implications for TRUSTe are a payment of $200,000 as settlement but the loss of trust in TRUSTe may be considerably more significant.
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