CommLaw Monitor

'Big Three' Weigh in on Online Privacy: FTC, FCC and NTIA Testify at Privacy Hearing

Thu, 21 Jul 2011 10:21:42 -0400

On July 14, 2011, a joint House Energy and Commerce Subcommittee hearing focused on online privacy policy and perspectives of the ‘big three’ federal agencies with potential jurisdiction over online privacy – the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), and the National Telecommunications and Information Administration (NTIA). The hearing, Internet Privacy: The Views of the FTC, the FCC, and NTIA, offered a comprehensive review of the state of online consumer privacy and the appropriate industry and government response to developments in online behavioral advertising and tracking. The hearing comes on the heels of a flurry of online privacy and data security legislation introduced in recent weeks and months. Witnesses included FCC Chairman Julius Genachowski, FTC Commissioner Edith Ramirez and NTIA Administrator Lawrence E. Strickling.

The hearing touched on issues including the economic impact of privacy regulation, defining the harms caused by data collection, agency jurisdiction and authority, protecting children, data security, and social networking. Click here for more detail regarding the major themes discussed at the hearing, which expanded the growing legislative record on online privacy and security.

FTC Red Flag Rule Effective Date Set for November 1

Wed, 16 Sep 2009 18:26:55 -0400

The enforcement date for the FTC "Red Flag Rule" to prevent identity theft has been extended until November 1, 2009 in order to give businesses more time to understand the rule and take steps to comply. The rule applies to any entity under FTC jurisdiction that is a "creditor" or "financial institution" and which maintains customer accounts which extend credit through post-paid arrangement. This would include a VoIP provider that bills monthly after the fact, for example. For those subject to the rule, they must take steps outlined by the FTC to allow them to look for "red flags" which might indicate identity theft from their customer information. Click here for more information. The rule should be taken seriously, both because FTC enforcement action can be taken against companies who fail to comply, and because failure to comply might create follow-on civil liability in class action or consumer lawsuits. Additional information about the Red Flag Rule is also available on Kelley Drye's Advertising Law blog.

FTC BringsThird Prepaid Card Case This Year

Wed, 16 Sep 2009 17:39:17 -0400

The Federal Trade Commission has sued Diamond Phone Card and two individuals for allegedly(1) misrepresenting the number of minutes provided by the cards and (2) failing to disclose adequately the effect of fees on the number of minutes available. Federal Trade Commission v. Diamond Phone Card, Inc. (U.S.E.D.N.Y. No. 09-3257). The Complaint asks for a permanent injunction to prevent future violations, refunds and restitution for consumers, and the agency's costs of investigation.

This case was announced on August 5, and follows the FTC's June settlement with Clifton Telecard Alliance (paid $1.3 million) and the February settlement with Alternatel and Mystic Prepaid (paid $2.25 million). All three cases have been brought against card distributors, not telecom carriers, in deference to the "common carrier" exclusion from the FTC's enforcement jurisdiction. Diamond Phone is based in the New York City area. The FTC News Release announcing the suit thanked authorities in El Salvador, Colombia, Egypt, Mexico, Panama and Peru for their help in investigating the case. The news release and a link to the Complaint can be found here.

It is noteworthy that the Diamond Phone cards included written disclosures on their posters and on the cards themselves, as described in the FTC Complaint. Diamond also had voice prompts. However, the FTC lawsuit alleges the disclosures are inadequate because they are too small (10 point font on posters), are too separated from the larger rate claims (at the bottom of the poster) and were too vague ("connection fee may apply"). The disclosures on the cards themselves were said to be in 5 point font that is "nearly impossible to read" and appear on a portion of the card which is below a perforation and discardable. The FTC said it tested several cards and the initial prompts stated different numbers of minutes than that stated on the cards and posters, and that even those minutes were not actually delivered. For example, the FTC said that a 50 minute card initially prompted 37 minutes and then delivered only 20 minutes in a single call. Another card was said to be for 400 minutes to Mexico, but prompted 391 minutes and delivered only 106 minutes in a series of five calls of about 20 minutes each.