FTC Wields Shield Against False Participation Claims

Advertising Law

In the agency’s first cases enforcing the European Union-United States Privacy Shield framework, the Federal Trade Commission (FTC) settled with three companies that falsely claimed they were certified to participate in the data-sharing agreement.

After the EU’s highest court struck down the Safe Harbor, the previous iteration of the agreement, the parties established the Privacy Shield in 2016 to regulate the transatlantic transfer of data.

Companies that want to join the Privacy Shield must certify to the U.S. Department of Commerce that they are in compliance with the Privacy Shield Principles and must subject themselves to the jurisdiction of the FTC or the U.S. Department of Transportation.

But Decusoft LLC, Tru Communication Inc. and Md7 LLC all ran afoul of Section 5 of the Federal Trade Commission Act by stating that they were Shield certified when none of them actually completed the required certification process, the agency alleged in separate complaints. Decusoft also falsely claimed participation in the Swiss-U.S. Privacy Shield framework, the FTC said.

To settle the charges, the human resources software company, printing services company and manager of real estate leases for wireless companies are prohibited from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any self-regulatory or standard-setting organization. Additional FTC reporting requirements were included in the deal.

The consent agreements are open for public comment until Oct. 10.

To read the complaints and proposed consent orders in the three actions, click here.

Why it matters: The agency’s first actions pursuant to the Shield come a little more than one year after it took effect and put advertisers on notice that the FTC is now focused on enforcement. Under the prior framework, the FTC brought 39 enforcement actions. “Today’s actions highlight the FTC’s commitment to aggressively enforce the Privacy Shield frameworks, which are important tools in enabling transatlantic commerce,” Acting FTC Chair Maureen K. Ohlhausen said in a statement about the action. “Companies that want to benefit from these agreements must keep their promises or we will hold them accountable.”



pursuant to New York DR 2-101(f)

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