It turns out that TRUSTe, the provider of privacy certifications for online businesses, may not be so trustworthy after all. The company failed to conduct annual recertification checks for hundreds of companies holding its privacy seal, despite promising to do so, the U.S. Federal Trade Commission has charged.
The FTC and TRUSTe have reached a settlement on the agency's complaint that the company deceived consumers about its recertification program, the FTC announced Monday.
From 2006 until January 2013, TRUSTe failed to conduct annual recertifications of companies holding TRUSTe privacy seals in more than 1,000 cases, despite saying on its website that companies holding TRUSTe Certified Privacy Seals receive recertification every year, the FTC alleged in its complaint.
In addition, since TRUSTe became a for-profit corporation in 2008, the company has failed to require companies using its seals to update references to the organization's former non-profit status, the FTC alleged. Before converting to a for-profit company, TRUSTe provided clients model language describing TRUSTe as a non-profit for use in their privacy policies, the agency said in a press release.
TRUSTe provides seals to businesses that meet requirements for consumer privacy programs that it administers. TRUSTe seals assure consumers that businesses' privacy practices comply with privacy standards like the U.S. Children's Online Privacy Protection Act [COPPA], a law that limits the amount of personal information Web-based businesses can collect from children.
"TRUSTe promised to hold companies accountable for protecting consumer privacy, but it fell short of that pledge," FTC Chairwoman Edith Ramirez said in a statement. "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."
TRUSTe CEO Chris Babel said the company takes its privacy role seriously. The company has taken fast action to fix the "process issues" covered by the FTC complaint, he said in a blog post.
"We regret that, in these two cases, our processes did not live up to our own standards," he said.
The settlement prohibits TRUSTe from making misrepresentations about its certification process or timeline, and bars it from misrepresenting its corporate status or whether an entity participates in its program, the FTC said.
The settlement also requires the company to file annual reports at the FTC about its COPPA certifications. The company must also pay $200,000 as part of the settlement.
Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is [email protected]