TRUSTe Settles Charges That It Misrepresented Practices

The Federal Trade Commission has charged privacy compliance company TRUSTe with misrepresenting its practices to consumers.

Specifically, the FTC alleged that contrary to its stated policies, TRUSTe (which stands for True Ultimate Standards Everywhere) didn't conduct annual re-certifications of around 1,000 companies between 2006 and 2013.

The FTC also alleged that TRUSTe re-certified clients who described the organization on their sites as a nonprofit  — even though the compliance vendor became a for-profit corporation six years ago.

The company agreed to settle the charges by promising that it won't misrepresent its practices in the future -- including how often it recertifies clients. TRUSTe also agreed to pay $200,000 to the FTC.

“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 stated on Monday that it has “identified and fixed the process for annual reviews, and implemented new controls” to ensure all clients are recertified annually. The company also says it now prohibits clients from calling it a non-profit on their sites.

CEO Chris Babel added in a blog post that the clients who weren't reviewed annually had entered into “multi-year agreements” with TRUSTe and, for the most part, were recertified every two years. He added that those clients represented fewer than 10% of the total number of annual reviews TRUSTe was scheduled to conduct.

“We have taken swift action to address the process issues covered by the agreement,” Babel wrote. “We regret that ... our processes did not live up to our own standards.”

The FTC voted 5-0 to accept the settlement, but Commissioner Maureen Ohlhausen said she disagreed with the FTC's legal theory regarding TRUSTe's liability when clients said the company was a nonprofit. The FTC alleged that TRUSTe “provided its clients with the means and instrumentalities to deceive others” by recertifying companies that inaccurately described it.

Ohlhausen said the FTC should have framed the charges differently. “Because TRUSTe never misrepresented its corporate status, TRUSTe’s actions regarding its corporate status at most comprise aiding and abetting its clients’ actions,” Ohlhausen wrote.


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