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Internet of Things: FTC staff report and a new publication for businesses

January 27, 2015 Comments off

Internet of Things: FTC staff report and a new publication for businesses
Source: Federal Trade Commission

We’ve all been talking about the Internet of Things – the ability of everyday objects to connect to the Internet to send and receive data. (We wouldn’t be surprised if our devices are talking about it, too.) A just-released FTC Staff Report recaps what we learned at our November 2013 workshop on the subject and discusses four ongoing initiatives to address the consumer protection implications. There’s also a new nuts-and-bolts publication, Careful Connections: Building Security in the Internet of Things, for businesses developing the next generation of connected devices.

What kind of products are part of the Internet of Things? It’s the bracelet that shares with friends how far you walked in a day, the home automation system that switches the lights on as you turn onto your street, and maybe that under-wraps innovation your company is working on right now.

The scope of the industry is vast. Six years ago, the number of connected devices surpassed the number of people and the total now tops 25 billion worldwide. Experts estimate that by the end of the decade, that figure will bump to 50 billion. And it’s no wonder, given the potential benefits to consumers.

But businesses should think about the potential for risk, too. Protecting against unauthorized access to consumers’ personal information – something companies have been dealing with for decades now – is just one consideration. The Internet of Things poses new challenges, too. For example, if a consumer can use a device to lock the front door remotely, could a weak spot in the system let a burglar unlock it? The success of the industry depends, in part, on whether it can earn consumer confidence.

FTC sues AT&T for limiting “unlimited data”

October 28, 2014 Comments off

FTC sues AT&T for limiting “unlimited data”
Source: Federal Trade Commission

“Unlimited data” sounds great, right? Browse the Internet, stream videos, use GPS, even make video calls – all to your heart’s content. But what if you bought an unlimited data plan and then weren’t able to do all those things? That’s what happened to some AT&T customers.

From 2007 until 2010, AT&T offered unlimited data plans for smartphones. Even after it stopped offering unlimited data, AT&T allowed customers who already had unlimited plans to renew them.

But here’s the catch: AT&T then began slowing the data speed for “unlimited” customers who used large amounts of data. As a result, those customers with “unlimited” plans no longer had the bandwidth to do everything they wanted to do on their phones. That’s called data throttling.

Data throttling isn’t always illegal, but when it’s done in a way that’s deceptive or unfair, it most certainly is.

CRS — The Federal Trade Commission’s Regulation of Data Security Under Its Unfair or Deceptive Acts or Practices (UDAP) Authority (September 11, 2014)

September 18, 2014 Comments off

The Federal Trade Commission’s Regulation of Data Security Under Its Unfair or Deceptive Acts or Practices (UDAP) Authority (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

The Federal Trade Commission Act established the Federal Trade Commission (FTC or Commission) in 1914. The protection of consumers from anticompetitive, deceptive, or unfair business practices is at the core of the FTC’s mission. As part of that mission, the FTC has been at the forefront of the federal government’s efforts to protect sensitive consumer information from data breaches and regulate cybersecurity. As the number of data breaches has soared, so too have FTC investigations into lax data security practices. The FTC has not been delegated specific authority to regulate data security. Rather, the FTC has broad authority under Section 5 of the Federal Trade Commission Act (FTC Act) to prohibit unfair and deceptive acts or practices.

FTC Alleges Amazon Unlawfully Billed Parents for Millions of Dollars in Children’s Unauthorized In-App Charges

July 10, 2014 Comments off

FTC Alleges Amazon Unlawfully Billed Parents for Millions of Dollars in Children’s Unauthorized In-App Charges
Source: Federal Trade Commission

Amazon.com, Inc. has billed parents and other account holders for millions of dollars in unauthorized in-app charges incurred by children, according to a Federal Trade Commission complaint filed today in federal court.

The FTC’s lawsuit seeks a court order requiring refunds to consumers for the unauthorized charges and permanently banning the company from billing parents and other account holders for in-app charges without their consent. According to the complaint, Amazon keeps 30 percent of all in-app charges.

Amazon offers many children’s apps in its appstore for download to mobile devices such as the Kindle Fire. In its complaint, the FTC alleges that Amazon violated the FTC Act by billing parents and other Amazon account holders for charges incurred by their children without the permission of the parent or other account holder. Amazon’s setup allowed children playing these kids’ games to spend unlimited amounts of money to pay for virtual items within the apps such as “coins,” “stars,” and “acorns” without parental involvement.

FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills

July 1, 2014 Comments off

FTC Alleges T-Mobile Crammed Bogus Charges onto Customers’ Phone Bills
Source: Federal Trade Commission

In a complaint filed today, the Federal Trade Commission is charging mobile phone service provider T-Mobile USA, Inc., with making hundreds of millions of dollars by placing charges on mobile phone bills for purported “premium” SMS subscriptions that, in many cases, were bogus charges that were never authorized by its customers.

The FTC alleges that T-Mobile received anywhere from 35 to 40 percent of the total amount charged to consumers for subscriptions for content such as flirting tips, horoscope information or celebrity gossip that typically cost $9.99 per month. According to the FTC’s complaint, T-Mobile in some cases continued to bill its customers for these services offered by scammers years after becoming aware of signs that the charges were fraudulent.

In a process known as “third-party billing,” a phone company places charges on a consumer’s bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer’s authorization, it is known as “cramming.”

The FTC’s complaint alleges that in some cases, T-Mobile was charging consumers for services that had refund rates of up to 40 percent in a single month. The FTC has alleged that because such a large number of people were seeking refunds, it was an obvious sign to T-Mobile that the charges were never authorized by its customers. As the complaint notes, the refund rate likely significantly understates the percentage of consumers who were crammed. The complaint also states that internal company documents show that T-Mobile had received a high number of consumer complaints at least as early as 2012.

FTC Recommends Congress Require the Data Broker Industry to be More Transparent and Give Consumers Greater Control Over Their Personal Information

May 28, 2014 Comments off

FTC Recommends Congress Require the Data Broker Industry to be More Transparent and Give Consumers Greater Control Over Their Personal Information
Source: Federal Trade Commission

In a report issued today on the data broker industry, the Federal Trade Commission finds that data brokers operate with a fundamental lack of transparency. The Commission recommends that Congress consider enacting legislation to make data broker practices more visible to consumers and to give consumers greater control over the immense amounts of personal information about them collected and shared by data brokers.

The report, “Data Brokers: A Call for Transparency and Accountability” is the result of a study of nine data brokers, representing a cross-section of the industry, undertaken by the FTC to shed light on the data broker industry. Data brokers obtain and share vast amounts of consumer information, typically behind the scenes, without consumer knowledge. Data brokers sell this information for marketing campaigns and fraud prevention, among other purposes. Although consumers benefit from data broker practices which, for example, help enable consumers to find and enjoy the products and services they prefer, data broker practices also raise privacy concerns.

See also: A Review of the Data Broker Industry: Collection, Use, and Sale of Consumer Data for Marketing Purposes (U.S. Senate Committee on Commerce, Science and Transportation)

Snapchat Settles FTC Charges That Promises of Disappearing Messages Were False

May 8, 2014 Comments off

Snapchat Settles FTC Charges That Promises of Disappearing Messages Were False
Source: Federal Trade Commission

Snapchat, the developer of a popular mobile messaging app, has agreed to settle Federal Trade Commission charges that it deceived consumers with promises about the disappearing nature of messages sent through the service. The FTC case also alleged that the company deceived consumers over the amount of personal data it collected and the security measures taken to protect that data from misuse and unauthorized disclosure. In fact, the case alleges, Snapchat’s failure to secure its Find Friends feature resulted in a security breach that enabled attackers to compile a database of 4.6 million Snapchat usernames and phone numbers.

According to the FTC’s complaint, Snapchat made multiple misrepresentations to consumers about its product that stood in stark contrast to how the app actually worked.

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