Facebook Reaches Settlement with FTC on Privacy Violations

Tue Nov 29, 2011 6:08am EST

Facebook has reached a settlement with the Federal Trade Commission over charges that it violates users personal privacy. 

The FTC decision should send a strong signal to other tech companies that mine the personal information of web users for profit. 

In the case of Facebook, the commission alleged that the social networking giant did not properly alert its members after overhauling default settings that made more of their information publicly accessible.

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The settlement requires Facebook to give consumers "clear and prominent" notice about any changes to privacy settings and to obtain their consent before their information is shared. 

The company also will have to undergo periodic audits of its privacy practices over the next 20 years. 

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In a release touting the settlement, no mention was made of any cash penalty. 

"Facebook is obligated to keep the promises about privacy that it makes to its hundreds of millions of users," FTC Chairman Jon Leibowitz said in a statement. "Facebook's innovation does not have to come at the expense of consumer privacy. The FTC action will ensure it will not."

The commission voted unanimously to approve the settlement, which comes as Facebook is readying an initial public offering that is reportedly scheduled to take place in the spring of 2012.  Analysts had fretted that controversies over Facebook's use of private information could cloud the tech company's market debut. 

It also takes place as the Obama administration, members of congress, and the FTC itself are taking steps to crack down on internet companies that infringe upon users personal privacy. 

"I am glad that the FTC has given much needed attention to Facebook’s practices and privacy policies,” Joe Barton (R-Texas), co-chairman of the Bi-Partisan Privacy Caucus, said in a statement. “Social networking is about connecting with friends, family members and customers. There is a level of trust involved that should not be violated. I was disappointed when Facebook made user profiles public by default and without adequate notice. The Commission and Facebook are both making a strong statement today with their settlement terms: consumer privacy matters.”

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