FTC Announces Settlements with Four Companies Related to Allegations they Deceived Consumers over Participation in the EU-U.S. Privacy Shield

The Federal Trade Commission has reached settlements with four companies that allegedly misrepresented their participation in the EU-U.S. Privacy Shield framework, which enables companies to transfer consumer data legally from European Union countries to the United States. The FTC also alleged that two of the companies failed to comply with Privacy Shield requirements.

In separate actions, the FTC settled Privacy Shield cases against:

• Click Labs, Inc., a website and mobile app services provider;
• Incentive Services, Inc., a developer of service award and incentive programs for employers;
• Global Data Vault, LLC, a provider of data storage and recovery services; and
• TDARX, Inc., an IT services provider.

In addition to allegations that each company falsely claimed to participate in the EU-U.S. Privacy Shield framework, the FTC also alleged that Click Labs and Incentive Services falsely claimed to participate in the Swiss-U.S. Privacy Shield framework, which establishes a process for companies to transfer consumer data in compliance with Swiss law.

In its cases against Global Data and TDARX, the FTC further alleged that the companies continued to claim participation in EU-U.S. Privacy Shield after allowing their certifications to lapse, and that those companies failed to comply with the framework. The companies allegedly failed to verify annually that statements about their Privacy Shield practices were accurate, and failed to affirm that they would continue to apply Privacy Shield protections to personal information collected while participating in the program.

“The Privacy Shield Framework is critical to facilitating transatlantic commerce and assuring our European partners of our commitment to data protection,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “Enforcement of the Privacy Shield framework is a priority of the FTC, and we will hold companies accountable where, as here, they fail to keep their Privacy Shield promises.”

The Department of Commerce administers both the EU-U.S. and Swiss-U.S. Privacy Shield frameworks, while the FTC enforces the promises companies make when joining the programs. With today’s announcement, the FTC has now brought a total of 21 enforcement actions related to the EU-U.S. Privacy Shield framework since it was established in 2016.

Under the settlements, all four companies are prohibited from misrepresenting their participation in the EU-U.S. Privacy Shield framework, as well as any other privacy or data security program sponsored by any government, or any self-regulatory or standard-setting organization. As part of their settlements, Global Data Vault and TDARX also are required to continue to apply the Privacy Shield protections to personal information they collected while participating in the program, or return or delete the information.

The Commission voted 5-0 to issue the proposed administrative complaints and to accept the consent agreements with the four companies. The FTC has published a description of the consent agreement packages in the Federal Register. The agreements will be subject to public comment for 30 days after publication in the Federal Register after which the Commission will decide whether to make the proposed consent orders final. Once processed, comments will be posted on Regulations.gov. (See Related Actions to file a comment by January 17, 2020.)

NOTE: The Commission issues an administrative complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. When the Commission issues a consent order on a final basis, it carries the force of law with respect to future actions. Each violation of such an order may result in a civil penalty of up to $42,530.

The Federal Trade Commission works to promote competition, and protect and educate consumers. You can learn more about consumer topics and file a consumer complaint online or by calling 1-877-FTC-HELP (382-4357). Like the FTC on Facebook, follow us on Twitter, read our blogs, and subscribe to press releases for the latest FTC news and resources.