Peer-to-Peer File-Sharing Risks Can Be Better Disclosed

The Federal Trade Commission today told a Senate Subcommittee that, although peer-to-peer (P2P) file-sharing technology has benefits, it can create risks to consumers and some consumers may not be aware of these risks. Speaking to the Senate Commerce Committee’s Subcommittee on Competition, Infrastructure, and Foreign Commerce, Howard Beales, Director of the FTC’s Bureau of Consumer Protection, said the agency will work with the P2P file-sharing software industry to improve risk disclosures to consumers.

Beales called P2P file-sharing a neutral technology and said that P2P file-sharing programs can increase the speed and reduce the cost of file downloads.

The FTC testimony warns that when consumers download P2P file-sharing software, they may also be downloading other unwanted software, including spyware. The testimony notes that the agency is conducting non-public investigations concerning potential unfair or deceptive practices in connection with the dissemination of spyware.

According to the testimony, there may be other risks as well. “Consumers may inadvertently place files with sensitive personal information in their directory of files to be shared,” it says, thereby giving others access to their personal information. “Consumers may receive files with viruses and other programs that could impair the operation of their personal computers. Consumers may receive or redistribute files that may subject them to civil or criminal liability under laws governing copyright infringement and pornography. Because of the way the files are labeled, individuals, including children, may be exposed to unwanted and disturbing images. The Commission is concerned with the exposure of individuals, especially children, to unwanted pornographic materials through deceptive practices,” the testimony says.

Beales said that the FTC has reviewed disclosure statements on the Web sites of the ten most popular P2P file-sharing software programs to determine whether the program distributors misrepresent the risks associated with P2P file-sharing. “None of these representations appear on their face to be false or misleading,” the testimony says.

“Nevertheless, distributors of P2P file-sharing programs do not appear to be providing as much risk information about their products as they could or providing risk information as clearly and conspicuously and they might,” the testimony says.

According to the testimony, the Commission staff will work with industry to improve disclosure statements. “A P2P file-sharing software industry trade association recently wrote to the Commission to report that its member companies have a ‘desire . . . to act responsibly, to improve their products and to offer consumers a high-quality experience.’ We will encourage industry members to make good on this offer by improving their disclosures of risk information to consumers.”

The Commission vote to approve the testimony was 4-0, with Chairman Timothy J. Muris not participating.

An FTC publication, “File-Sharing: A Fair Share? Maybe Not” provides tips for consumers about the risks of file sharing. It is available at http://www.ftc.gov/bcp/conline/pubs/alerts/sharealrt.htm.

Copies of the testimony are available from the FTC’s Web site at http://www.ftc.gov and also from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint in English or Spanish (bilingual counselors are available to take complaints), or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. P034806)