The FTC's TRUSTe case: When seals help seal the deal

People who aren’t into marketing jargon might not know a “credence claim” from a Creedence Clearwater Revival, but experts tell us it’s a representation about a product that consumers aren’t in a position to evaluate for themselves. One example is what websites say about their privacy practices. Because consumers can’t test the accuracy of those claims, they often rely on third-party seals trusted for their expertise and independence. The FTC just settled a case alleging that one of those seal programs – TRUSTe – misrepresented key aspects of its certifications.

TRUSTe’s Certified Privacy Seals are pretty much everywhere you look on the web. Advertising itself as “the #1 privacy brand,” TRUSTe says its Certified Privacy Seal is “recognized globally by consumers, businesses, and regulators as demonstrating privacy best practices.” To display the TRUSTe icon, sites must meet requirements about the transparency and verification of their privacy practices, as well as consumer choice about how personal information is collected and used. TRUSTe uses a variety of tools to test and verify compliance.

So how does the complaint allege TRUSTe violated Section 5 of the FTC Act? Count 1 charges that TRUSTe said that “Participant shall undergo recertification to verify ongoing compliance with these Program Requirements annually,” but then didn’t conduct any kind of recertification in more than 1,000 instances between 2006 and January 2013. The complaint charges that TRUSTe’s failure to follow up made that statement false or misleading.

Count 2 centers on the representation that TRUSTe is a non-profit organization. That was true when TRUSTe was formed in 1997. Its non-profit status was so important to TRUSTe that it provided sites bearings its logo with model language to use in their privacy policies: “TRUSTe is an independent, non-profit organization whose mission is to build users’ trust and confidence in the Internet by promoting the use of fair information practices.” In 2008, TRUSTe became a for-profit company. However, in numerous instances since then, it has recertified sites that state – falsely now – that TRUSTe is a non-profit. The complaint charged that by originally mandating that language and then recertifying sites since 2008 that conveyed that now-false statement, TRUSTe provided those sites with the “means and instrumentalities” to deceive consumers.

The proposed settlement in the case prohibits a broad range of misrepresentations about TRUSTe’s certification (and recertification) practices, corporate status, and independence. The order also imposes $200,000 in disgorgement and additional reporting requirements regarding TRUSTe’s COPPA safe harbor, which the FTC approved in 2001.  You can file an online comment about the proposed settlement by December 17, 2014.

What’s the message for other companies? Seals and certifications are persuasive to consumers, especially for credence claims. So it’s important that representations conveyed by those marks are truthful. Furthermore, as is the case for any other advertising claim, compliance isn’t a one-and-done exercise. This is especially true for entities that tout their own trustworthiness in certifying the practices of others.