Sears settles with FTC in privacy flap

WASHINGTON (Reuters) - Sears Holdings Corp (SHLD.O) has agreed to settle allegations it collected personal data from customers without adequate disclosures, the Federal Trade Commission said on Thursday.

The FTC had accused Sears Holdings, created in 2005 with the merger of Sears and Kmart, of paying online customers $10 to allow the company to track their online browsing.

But the FTC said Sears also collected information on non-Sears sites, such as online bank statements, drug prescription records and emails.

Sears did disclose all it would monitor in a lengthy user license agreement, but the FTC argued it was not enough.

"The complaint charges that Sears' failure to adequately disclose the scope of the tracking software's data collection was deceptive," the FTC said in a statement.

Under the settlement, Sears is required to destroy the data collected and make future disclosures more prominent.

Sears said that the company had conducted a research project, which concluded more than a year ago, and that all personal information collected was destroyed at that time.

"At all times, Sears Holdings ensured the privacy and security of the personal information of all participants who enrolled in the program," Sears said in an email statement. "No customer data was ever compromised or disclosed."

(Reporting by Diane Bartz; Editing by Andre Grenon, Bernard Orr)