• by Wendy Davis  @wendyndavis, October 22, 2012

Market research company Compete has agreed to destroy data about Web users gathered before February 2010 in order to settle charges that it unlawfully collected information, the Federal Trade Commission said on Monday.

The settlement agreement also prohibits the company from misrepresenting its data collection and security practices in the future. Compete also agreed to biennial audits for the next 20 years.

If accepted, the settlement would resolve a Federal Trade Commission complaint charging Compete with deceiving users by failing to reveal its broad data collection practices.

The charges stem from Compete's distribution of its software -- including a toolbar that offered users the chance to learn about the Web sites they visited. While Compete disclosed that the toolbar would gather some information from consumers, the company failed to reveal "the full extent of data collected through tracking software," according to the FTC.

That data included credit card numbers, security codes, expiration dates, Social Security numbers, and other information entered by consumers at ecommerce sites. Compete's data collection allegedly was so pervasive that the company knew whether people who visited ecommerce sites left items in their shopping carts or made purchases.

Compete's failure to disclose the scope of its data gathering "was, and is, a deceptive act or practice," the FTC alleges.

The FTC also says that even though Compete promised consumers it would filter out sensitive data and "personally identifiable information" before that material reached its servers, it didn't do so. Even worse, the company allegedly transmitted that data -- including financial information -- in clear text, which can be intercepted.

The FTC says that Compete revised its filters and also stopped distributing its toolbar in January of 2010, after a report was published outlining problems with the company's data collection. The FTC apparently was referring to a report by Harvard professor Ben Edelman.

A company that licensed Compete's software, Upromise, agreed to settle FTC charges earlier this year.