The social networking site Myspace today settled Federal Trade Commission charges that it misled its users about what information it shared with outside advertisers, and agreed to implement extensive privacy reforms.
The FTC alleged that Myspace violated Section 5 of the FTC Act, which bars deceptive acts or practices, by promising users it would not share their personally identifiable information without their permission. In reality, according to the FTC's administrative complaint, Myspace revealed unique user "Friend IDs" to advertisers, which meant companies “could take simple steps to get detailed information about individual users.”
“Advertisers also could combine the user's real name and other personal information with additional information to link broader web-browsing activity to a specific individual,” the FTC stated.
The FTC also objected that Myspace certified it complied with the U.S.-EU Safe Harbor Framework, which provides a method for U.S. companies to transfer personal data lawfully from the European Union to the United States. Compliance includes a requirement that consumers are fully informed of how their information will be used and given the choice of opting out. The FTC said Myspace wrongly claimed it complied with the framework.
Under the terms of the proposed settlement, Myspace agreed to establish and maintain a comprehensive privacy program, including a requirement that it obtain biennial assessments of its efforts by independent, third-party auditors for 20 years. Myspace, which was acquired by Specific Media in June 2011, must also accurately represent exactly what information it shares.
“In order to put any questions regarding Myspace’s pre-acquisition advertising practices behind us, Myspace has reached an agreement with the FTC that makes a formal commitment to our community to accurately disclose how their information is used and shared,” the company said in an emailed statement. “Of course, part of creating the ultimate social entertainment destination is allowing users to feel comfortable and secure about the information they share. Myspace has a long history of developing cutting-edge tools for controlling how information is used and shared. Yet, there is always room for improvement. That’s why one of our first actions after acquiring Myspace was to thoroughly examine the company’s business practices and, where applicable, make improvements.”
Myspace was represented by Gibson, Dunn & Crutcher partners M. Sean Royall and S. Ashlie Beringer. Royall, who declined comment, previously served as lead counsel for Facebook in connection with the company’s 2010 privacy-related consent order/settlement with the FTC.
The FTC will accept public comments on the proposed settlement until June 8.