• by Wendy Davis  @wendyndavis, August 7, 2017

The software company AnchorFree brags that its virtual private network, Hotspot Shield, offers consumers the ability to browse the web "privately." But despite its marketing boasts, the company allegedly shares data about users' activity with ad networks and other third parties, the group Center for Democracy & Technology alleges in a Federal Trade Commission complaint brought Monday.

HotSpot Shield "monitors information about users’ browsing habits while the VPN is in use," the complaint alleges.

"While insisting that it does not make money from selling customer data, Hotspot Shield promises to connect advertisers to unique users that are frequent visitors of travel, retail, business, and finance websites," the complaint alleges. "These entities have access to IP addresses and device identifiers collected via Hotspot Shield.

The CDT says in the complaint that it worked with Carnegie Mellon University to test AnchorFree's virtual private network. The school "found undisclosed data sharing practices with third party advertising networks," according to the complaint.

The digital rights group argues that Hotspot Shield's alleged targeted ad program is a deceptive and unfair trade practice.

"Hotspot Shield’s statements to the media, application descriptions that users’ 'security and privacy are guaranteed,' ... are misleading and would lead the average user to believe the VPN service is more secure and more privacy-protecting than the reality of Hotspot Shield’s data practices," the complaint states.

The organization adds that it is unfair for Hotspot Shield to "present itself as a mechanism for protecting the privacy and security of consumer information, while profiting off of that information by collecting and sharing access to it with undisclosed third parties."

In March, when federal lawmakers voted to repeal the Federal Communications Commission's broadband privacy rules -- which would have required broadband providers to obtain users' explicit consent before using their browsing history for ad targeting -- privacy experts advised consumers that using a virtual private network could thwart online tracking.

Hotspot Shield specifically referenced the repeal of those rules in a blog post touting its virtual private network.

"In case you haven’t heard of it yet, your search history is not safe from being sold by your Internet service provider to advertisers anymore if you live in the US.," the company wrote. "Using a free anonymous VPN such as Hotspot Shield is an effective way to prevent advertisers from showing you targeted ads."

AnchorFree and its representatives haven't yet responded to MediaPost's request for comment.