Markets Wired

An online advertising company agreed to settle Federal Trade Commission charges that it used “history sniffing” to secretly and illegally gather data from millions of consumers about their interest in sensitive medical and financial issues ranging from fertility and incontinence to debt relief and personal bankruptcy.

The FTC settlement order bars the company, Epic Marketplace Inc., from continuing to use history sniffing technology, which allows online operators to “sniff” a browser to see what sites consumers have visited in the past.  It also bars future misrepresentations by Epic and requires the company to destroy information that it gathered unlawfully.

“Consumers searching the Internet shouldn’t have to worry about whether someone is going to go sniffing through the sensitive, personal details of their browsing history without their knowledge,” said FTC Chairman Jon Leibowitz.  “This type of unscrupulous behavior undermines consumers’ confidence, and we won’t tolerate it.”
 
Epic Marketplace is a large advertising network that has a presence on 45,000 websites.  Consumers who visited any of the network’s sites received a cookie, which stored information about their online practices including sites they visited and the ads they viewed.  The cookies allowed Epic to serve consumers ads targeted to their interests, a practice known as online behavioral advertising.   

In its privacy policy, Epic claimed that it would collect information only about consumers’ visits to sites in its network.  However, according to the FTC, Epic was employing history-sniffing technology that allowed it to collect data about sites outside its network that consumers had visited, including sites relating to personal health conditions and finances.   

According to the FTC complaint, the history sniffing was deceptive and allowed Epic to determine whether a consumer had visited any of more than 54,000 domains, including pages relating to fertility issues, impotence, menopause, incontinence, disability insurance, credit repair, debt relief, and personal bankruptcy.

The FTC complaint alleges that depending on which domains a consumer had visited, Epic assigned the consumer an interest segment, including categories such as “Incontinence,” “Arthritis,” “Memory Improvement,” and “Pregnancy-Fertility Getting Pregnant.”  Epic used these categories to send consumers targeted ads.

The consent order bars Epic Marketplace, Inc., and Epic Media Group, LLC from using history sniffing, and requires that they delete and destroy all data collected using it.  It also bars misrepresentations about the extent to which they maintain the privacy or confidentiality of data from or about a particular consumer, computer or device, including misrepresenting how that data is collected, used, disclosed or shared.  It bars misrepresentations about the extent to which software code on a webpage determines whether a user has previously visited a website.   

The Commission vote to accept the consent agreement package containing the proposed consent order for public comment was 5-0.  The FTC will publish a description of the consent agreement package in the Federal Register shortly.  The agreement will be subject to public comment for 30 days, beginning today and continuing through January 7, 2013, after which the Commission will decide whether to make the proposed consent order final.  Interested parties can submit written comments electronically or in paper form by following the instructions in the “Invitation To Comment” part of the “Supplementary Information” section. Comments in paper form should be mailed or delivered to: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.  The FTC is requesting that any comment filed in paper form near the end of the public comment period be sent by courier or overnight service, if possible, because U.S. postal mail in the Washington area and at the Commission is subject to delay due to heightened security precautions.

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. The complaint is not a finding or ruling that the respondent has actually violated the law. A consent order is for settlement purposes only and does not constitute an admission by the respondent that the law has been violated. 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 $16,000.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.  Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.