US - Federal Trade Commission Chairman Signals Increased Privacy Enforcement Activity

Speaking at the first in a series of Federal Trade Commission (FTC) Privacy Roundtables on 7 December 2009, FTC Chairman Jon Leibowitz indicated that prior FTC enforcement efforts on privacy "haven't worked as well" as the FTC would like. Leibowitz stated that the FTC has focused in the past on encouraging businesses to provide notice and choice to consumers, and on pursuing enforcement actions in cases involving economic harm. The Chairman's remarks suggest that, going forward, the FTC will be taking more enforcement actions in cases that do not involve economic harm, even in situations where the company has provided consumers with a privacy notice. The Chairman cited the recent FTC enforcement action against Sears as an example. In that case, Sears paid consumers USD10 if they would download software that would track their online browsing activities. Sears included a description of the online tracking capabilities of the software in the End User License Agreement (EULA). Leibowitz indicated that "nobody thought that Sears did bad things" with the consumer data, but explained that a privacy notice embedded within a long set of legal terms was not sufficiently prominent and clear "to let consumers know the deal they were making." This case, as well as Leibowitz's remarks and other comments by other FTC officials over the ensuing days, suggest businesses should begin finding ways to provide more prominent notice of key privacy terms outside the privacy policy and legal terms, and should be prepared for additional enforcement actions involving non-economic harm. Businesses should also continue to monitor FTC actions, as it appears that the FTC will be increasingly aggressive with privacy enforcement actions in the coming year.