Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: FTC settles with firms claiming compliance with U.S.-EU Safe Harbor privacy framework, (Apr 7, 2015)

By Edward L. Puzzo, J.D.

TES Franchising, LLC and American International Mailing, Inc., two business charged with falsely claiming they were abiding by an international privacy framework known as the U.S.-EU Safe Harbor, have agreed to settle the Federal Trade Commission’s charges against them, the FTC announced today.

The FTC alleged that the websites for TES Franchising, LLC and American International Mailing, Inc. had falsely claimed that they were certified under the U.S.-EU Safe Harbor Framework and U.S.-Swiss Safe Harbor Framework, when in fact their certifications had lapsed years earlier. (The FTC notes that verification of whether a participant in the U.S-EU or U.S.-Swiss Safe Harbor program holds a current self-certification can be obtained at export.gov/safeharbor)

The U.S.-EU Safe Harbor enables U.S. companies to transfer consumer data from the European Union to the United States in compliance with EU law. To participate in the U.S.-EU Safe Harbor Framework or U.S.-Swiss Safe Harbor Frameworks, a company must self-certify annually to the U.S. Department of Commerce that it complies with the seven privacy principles required to meet the EU’s adequacy standard: notice, choice, onward transfer, security, data integrity, access, and enforcement. A participant may also highlight for consumers its compliance with the Safe Harbor by displaying the Safe Harbor certification mark on its website.

The complaint against TES also alleges that TES deceived consumers about the nature of its dispute resolution procedures. On its website, the company stated that Safe Harbor-related disputes would be settled by an arbitration agency, would take place in Connecticut, and would split costs between the consumer and the company. According to the FTC’s complaint, the company had agreed in its Safe Harbor certification filing that it would resolve disputes through the European data protection authorities, which do not require in-person hearings and resolve disputes at no cost to the consumer. The complaint also alleges that the company deceptively claimed to be a licensee of the TRUSTe Privacy program.

Under the proposed settlement agreements, to be published in the Federal Register soon and subject to public comment until May 7, 2015, the companies are prohibited from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization. The settlement with TES further prohibits the company from misrepresenting its participation in or the terms of any alternative dispute resolution process or service.

Companies: TES Franchising, LLC; American International Mailing, Inc.

News: ConsumerProtection Privacy FederalTradeCommissionNews