Fifteen Privacy & Consumer Groups File FTC Complaint Against Facebook

It's no real secret that Facebook's latest privacy changes have stirred up a lot of conversation.  In response to those changes, fifteen agencies recently lodged a formal complaint against Facebook with the Federal Trade Commission.

Not-for-profit research center, Electronic Privacy Information Center ("EPIC") announced last week that it -- along with 14 other privacy and consumer protection organizations -- filed a complaint with the FTC accusing Facebook of engaging in unfair and deceptive trade practices. 

The complaint argues that changes Facebook made to its privacy settings adversely affect the network's users by disclosing personal information that users previously had not made available or had previously restricted.  The complaint states such changes constitute unfair and deceptive trade practices that "violate user expectations, diminish user privacy, and contradict Facebook’s own representations.  Pointing to the specifics, Paragraph 2 of the Introduction alleges:

"The following business practices are unfair and deceptive under Section 5 of the Federal Trade Commission Act:  Facebook disclosed users’ personal information to Microsoft, Yelp, and Pandora without first obtaining users’ consent; Facebook disclosed users’ information—including details concerning employment history, education, location, hometown, film preferences, music preferences, and reading preferences—to which users previously restricted access; and Facebook disclosed information to the public even when users elect to make that information available to friends only." 

EPIC has complained to the FTC about Facebook and other social networking sites (such as Google Buzz) in the past, but EPIC has made the May 5, 2010 complaint against Facebook available here.

Update: Social Media Law Student just shared a relevant post:
ACLU Weighs in on Facebook’s Privacy Issues.

Potential Employer Liability for Employee Endorsements Under FTC Guidelines

You may recall my earlier post, "FTC to Require Bloggers to Disclose Payments or Freebies for Endorsements," discussing the first update since 1980 to the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising. That earlier post focused primarily on the guide's requirement that bloggers disclose any payments or in-kind donations (i.e., freebies) received in exchange for reviewing a product or service. But remember these new guidelines require disclosures of any "material connections" between endorsers and the advertised companies (i.e., connections between the endorser and endorsee). Material connections may arise as a result of some relationship other than just payment or free products directly in exchange for a positive review. For example, under the new guides, an employer could be liable for online communications by its employee if the employee touts a product or service offered by his employer, but fails to make clear he works for the company he's promoting or "endorsing."  The guidelines include the following example (Example 8 in the final rule):

An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

It seems the new guides could potentially impose liability on employers for things their employees say online, even if the employer did not actually know those things were being said. The Commission seems to recognize that companies do not have control over all employee conduct. However, the FTC suggests that an employer may protect itself from liability if the employer has an appropriate policy governing social media participation by employees, clearly articulates that policy to employees, and consistently enforces that policy. The FTC explains:

With respect to Example 8 [laid out above], one commenter asserted that if the employer has instituted policies and practices concerning "social media participation" by its employees, and the employee fails to comply with such policies and practices, the employer should not be subject to liability. The Commission agrees that the establishment of appropriate procedures would warrant consideration in its decision as to whether law enforcement action would be an appropriate use of agency resources given the facts set forth in Example 8. Indeed, although the Commission has brought law enforcement actions against companies whose failure to establish or maintain appropriate internal procedures resulted in consumer injury, it is not aware of any instance in which an enforcement action was brought against a company for the actions of a single "rogue" employee who violated established company policy that adequately covered the conduct in question.

In sum, employees (as well as business owners or others with a material connection to a company) who use social media to endorse a product or service offered by their company should notify readers of their connection with the business they are talking about, and employers should implement or update social media policies to take into account the FTC guidelines.

Privacy Concerns Are All the Buzz

Google jumped on the social media bandwagon, but it's not going as well as Google had hoped.

Last week, Google launched Google Buzz, a social media service built right into Gmail, Google’s webmail tool.

Cue: immediate backlash from many users and privacy experts alike.

Initially, Google Buzz auto-populated a social network for Gmail users based on a user’s frequent contacts, potentially revealing relationships the user would rather not publicly announce. Buzz also automatically linked up other Google services (Google Reader, for example).

In response to user privacy worries, Google announced changes to Buzz twice within the first four days of its launch.

Despite those changes, the Electronic Privacy Information Center filed a complaint with the Federal Trade Commission yesterday, for what it called unfair and deceptive trade practices. In its complaint, EPIC asks the FTC to investigate Google Buzz for business practices it believes “violated user privacy expectations, diminished user privacy, contradicted Google’s own privacy policy, and may have also violated federal wiretap laws.” (In December, EPIC filed a similar complaint against Facebook after the popular social networking site changed its privacy settings.).

CBC News has also reported that the Office of the Privacy Commissioner of Canada will be taking a closer look at Google Buzz due to increasing privacy concerns, as well.

The woes don’t stop there. CNET News reports that security experts identified a security problem with the Buzz for Mobile service, making Google Buzz accounts susceptible to hacking. Although Google has already corrected the problem, this was just one more snag Google didn’t anticipate.

Yikes.  That's one rough week, Google.

FTC to Require Bloggers to Disclose Payments or Freebies for Endorsements

The Federal Trade Commission published its final guidelines governing endorsements and testimonials on Monday, and under the revisions, the FTC will for the first time attempt to regulate blogging. 

Under the new guides, Bloggers must disclose any payments or in-kind donations (i.e., freebies) they receive in exchange for reviewing a product or service. 

These changes mark the first revisions to the guides since 1980, and they become effective December 1, 2009.

The text of the Federal Register notice can be found here, and you can read the FTC's news release here.

This source points out that the new guides will apply to social networking sites, such as Facebook fan pages.