The Federal Trade Commission just finalized a settlement with ad company Turn over allegations that it violated users' privacy.
But the company's legal woes aren't over yet. Turn, which was recently acquired last month by Amobee, still faces the possibility of a class-action suit stemming from allegations that it used a controversial tracking technology.
That battle dates to 2015, when Verizon Wireless subscribers Anthony Henson and William Cintron alleged in a class-action complaint that Turn violated a consumer protection law prohibiting deceptive practices. They alleged that Turn wrongly used a controversial "supercookie" technology that enabled it to track consumers for online ad purposes.
Turn allegedly tracked Verizon wireless users via headers -- 50-character alphanumeric strings, called X-UIDHs -- that the telecom injected into all unencrypted mobile traffic. Those headers enabled ad companies to compile profiles of users and serve them targeted ads. The X-UIDHs also are known as “zombie” cookies, or "supercookies," because they allow ad companies to recreate cookies that users delete.
Last year, U.S. District Court Judge Jeffrey White in the Northern District of California sent the consumers' claims to arbitration. He said at the time that he agreed with Turn that the consumers' allegations were closely connected to their subscriber agreements with Verizon -- which call for arbitration of all disputes.
Lawyers for Henson and Cintron appealed that move to the 9th Circuit Court of Appeals. Henson and Cintron argued any arbitration agreements they entered into were with Verizon, not Turn.
For its part, Turn countered that the class-action allegations are closely connected to the consumers' agreements with Verizon. Turn also asserted that Verizon Wireless consumers consented to the company's ad-targeting program by accepting the subscriber agreements.
Late last week, lawyers for Henson and Cintron called the appellate court's attention to the recent FTC proceeding against Turn, arguing that the agency's decision to prosecute serves as evidence that consumers didn't agree to be tracked by Turn.
"While Turn attempts to escape litigation by characterizing its conduct as authorized and disclosed, the government has joined Petitioners in contending (and finding) exactly the opposite," class counsel writes.
The lawyers also called attention to the Federal Communications Commission's decision to fine Verizon $1.35 million for allegedly violating customers' privacy as well as a 2010 net neutrality rule requiring disclosure of broadband management practices.
The FCC's documents in that case state that "at least one" of Verizon's ad partners used the headers "for unauthorized purposes to circumvent consumers’ privacy choices by restoring deleted cookies."
It's not clear how either the FTC or FCC action will influence the 9th Circuit judges. But it's worth noting that Turn itself never admitted that it violated any laws in the FTC case, and wasn't a party to FCC's complaint against Verizon.
The 9th Circuit is slated to hear arguments in the matter later this month.