How Much Did Facebook Pay To Settle The FTC’s Privacy Charges? Can You Say Zero?

Certainly Judge Rakoff’s rejection of a $285 million SEC-Citigroup settlement was based, at least in part, on his view that the $285 million was an insufficient penalty to impose on Citigroup. We wonder how he would react to the FTC’s proposed settlement with Facebook over charges that Facebook deceived consumers by failing to keep privacy promises it made. The cost to Facebook of the proposed settlement: $0. 

We recognize that Facebook has agreed to take several steps that will require that it incur expenses. Specifically, under the proposed settlement, Facebook is:
 
·         barred from making misrepresentations about the privacy or security of consumers' personal information;
·         required to obtain consumers' affirmative express consent before enacting changes that override their privacy preferences;
·         required to prevent anyone from accessing a user's material no more than 30 days after the user has deleted his or her account;
·         required to establish and maintain a comprehensive privacy program designed to address privacy risks associated with the development and management of new and existing products and services, and to protect the privacy and confidentiality of consumers' information; and
·         required, within 180 days, and every two years after that for the next 20 years, to obtain independent, third-party audits certifying that it has a privacy program in place that meets or exceeds the requirements of the FTC order, and to ensure that the privacy of consumers' information is protected.
 
The proposed order also contains what the FTC refers to as “standard record-keeping provisions” to allow the FTC to monitor compliance with its order.  
 
But there is no specific financial penalty to be paid by Facebook. Surprising? We think so.
 
In case you are wondering, the FTC's eight-count complaint against Facebook lists a number of instances in which the FTC says Facebook made promises that it did not keep:
 
·         In December 2009, Facebook changed its website so certain information that users may have designated as private – such as their Friends List – was made public. Facebook didn't warn users that this change was coming, or get their approval in advance.
·         Facebook represented that third-party apps that users' installed would have access only to user information that they needed to operate. In fact, the apps could access nearly all of users' personal data – data the apps didn't need.
·         Facebook told users they could restrict sharing of data to limited audiences – for example with "Friends Only." In fact, selecting "Friends Only" did not prevent their information from being shared with third-party applications their friends used.
·         Facebook had a "Verified Apps" program & claimed it certified the security of participating apps. It didn't.
·         Facebook promised users that it would not share their personal information with advertisers. It did.
·         Facebook claimed that when users deactivated or deleted their accounts, their photos and videos would be inaccessible. But Facebook allowed access to the content, even after users had deactivated or deleted their accounts.
·         Facebook claimed that it complied with the US- EU Safe Harbor Framework that governs data transfer between the US and the European Union. It didn't.