Aug 102012
 
 August 10, 2012  Business, Featured News, Govt

FTC cleared up another big case week – it finalized its settlement with Facebook.

Despite receiving numerous comments on the proposed settlement, the Commission approved the final settlement without any changes:

Following a public comment period, the FTC has accepted as final a settlement with Facebook resolving charges that Facebook deceived consumers by telling them they could keep their information on Facebook private, and then repeatedly allowing it to be shared and made public.

The settlement requires Facebook to take several steps to make sure it lives up to its promises in the future, including by giving consumers clear and prominent notice and obtaining their express consent before sharing their information beyond their privacy settings, by maintaining a comprehensive privacy program to protect consumers’ information, and by obtaining biennial privacy audits from an independent third party.

The Commission vote to approve the final order and letters to members of the public who commented on it was 3-1-1 with Commissioner J. Thomas Rosch dissenting and Commissioner Maureen K. Ohlhausen not participating. The Commission issued a statement authored by Chairman Jon D. Leibowitz and Commissioners Edith Ramirez and Julie Brill. The Commission statement affirmed that, based on the extensive investigation of the staff, there is a strong reason to believe that the settlement is in the public interest, and that the Order’s provisions make clear that Facebook will be liable for a broad range of deceptive conduct. As set forth in his separate statement, Commissioner Rosch dissented from the acceptance of the final consent order, questioning whether Facebook’s express denial of liability provided “a reason to believe” that the settlement was “in the interest of the public” and expressing concern that the final consent order may not unequivocally cover all representations made in the Facebook environment. (FTC File No. 092-3184; the staff contact is Laura Berger, Bureau of Consumer Protection, 202-460-8364; see press release dated November 29, 2011.)

As he did with the Google settlement, Commissioner Rosch dissented, writing, in part:

I dissent from acceptance of this final consent order for two reasons. First, in the Agreement Containing Consent Order, respondent Facebook “expressly denies the allegations set forth in the complaint, except for the jurisdictional facts.”  Our Federal Trade Commission Rules of Practice do not provide for such a denial.  Beyond that, as I read Section 5, Commissioners are authorized to accept a consent agreement only if there is reason to believe that a respondent is engaging in an unfair or deceptive act or practice and that acceptance of the consent agreement is in the interest of the public. I respectfully suggest that the whole reason for requiring the Commission to conclude that there is “reason to believe” is to force the Commission to come to grips with the probability that the respondent did engage in conduct creating liability. I would further argue that in the real world, if the Commission allows the respondent to expressly deny that it did engage in that conduct (or to use language that is tantamount to an express denial), there is a questionable basis for us to conclude that that probability exists (or that the consent is in the public interest either).  Accordingly, I cannot find that either the “reason to believe” or the “in the interest of the public” requirement is satisfied when, as here, there is an express denial of the allegations set forth in the complaint.

I should add that I am also in favor of reconsidering Rule 2.32’s authorization of the inclusion of language in a consent agreement that it “is for settlement purposes only and does not constitute an admission by any party that the law has been violated as alleged in the complaint.” In comparison, the Securities and Exchange Commission’s informal procedures provide that, “it is important to avoid creating, or permitting to be created, an impression that a decree is being entered or a sanction imposed, when the conduct alleged did not, in fact, occur.”

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