FTC Reviewing Whether Facebook Violated Privacy Rules

FTC looking into whether Facebook violated an earlier agreement over privacy concerns.

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Facebook users who want their photos and online information kept private might have had their privacy violated when the company made recent changes to its website, according to the Federal Trade Commission (FTC).

[READ: Facebook Investors Vent Over Privacy, Stock Price]

On Wednesday the FTC announced that it would examine whether Facebook upheld an FTC privacy settlement the company agreed to in 2011. The FTC is examining updates to Facebook's privacy policy that were made on Aug. 29. The company misinformed users that they could keep information on Facebook private, while repeatedly allowing that information to be shared and made public, according to the 2011 settlement with the FTC. The settlement requires Facebook to notify users about changes to their privacy policy and to get "affirmative express consent," for any changes to that policy.

"We're monitoring compliance with the order and part of that involves interacting with Facebook," said Peter Kaplan, spokesperson for the FTC.

On Aug. 29, Facebook clarified in its update that it retains the right to use images and information about its users in advertisements on its website. Facebook has approximately 1.1 billion users.

"We routinely discuss policy updates with the FTC, and this time is no different," said Jodi Seth, spokesperson for Facebook. "Our updated policies do not grant Facebook any additional rights to use consumer information in advertising. Rather, the new policies further clarify and explain our existing practices. We take these issues very seriously and are confident that our policies are fully compliant with our agreement with the FTC."

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Sen. Ed Markey, D-Mass., sent a letter to FTC Chairwoman Edith Ramirez on Wednesday asking the commission to examine Facebook's changes for possible privacy violations.

"This troubling shift in policy raises a number of questions about whether Facebook is improperly altering its privacy policy without proper user consent and, if the changes go into effect, the degree to which Facebook users will lose control over their personal information," according to Markey's letter.

Markey also explained how the changes could affect teenagers who share information on the website. The updated privacy policy on Facebook explains that the information of minors can also be used in advertising because a minor's account on Facebook represents that "parents or legal guardians [have] also agreed to the terms."

"Teens, often impressionable and still developing and learning safe online habits, are especially vulnerable," Markey told Ramirez in his letter.

Facebook's recent privacy policy update was "part of a settlement in a court case relating to advertising," according to a statement on its website by Facebook's Chief Privacy Office Erin Egan. The company settled a class action lawsuit on Aug. 26 in San Francisco's U.S. District Court for the Northern District of California, agreeing to pay $20 million to compensate Facebook users who filed the lawsuit out of concern that their account information was being used in advertisements. As part of that settlement Facebook also promised to give users more control on how their content is shared.

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If Facebook were found in violation of the 2011 settlement with the FTC, the company could potentially face huge fines, which would be based on the number of U.S.-based Facebook users affected and the time they were affected by the violations, said Ashkan Soltani, an independent technology consultant. Facebook could face large fines in that scenario because its policy changes affect hundreds of millions of Americans, said Soltani, who investigated Facebook's consumer privacy as a staff technologist at the FTC in 2010 and 2011.

"Being under settlement with the FTC is like being on probation, and you have to take extra steps to protect consumer privacy," Soltani said of Facebook's 2011 settlement with the FTC.

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