Markets Wired

The Federal Trade Commission today told the House Committee on Oversight and Government Reform that consumer use of peer-to-peer file-sharing technology can be risky and discussed the work the FTC has done to address these risks to consumers. Mary Engle, Associate Director of the FTC’s Division of Advertising Practices, told the Committee, “Although P2P technology confers significant benefits, such as allowing for faster file transfers, conserving bandwidth and storage requirements, and saving on maintenance and energy costs, it also has been associated with risks to consumers.”

The testimony notes that P2P file sharing may expose consumers to spyware or adware that may come bundled with file-sharing programs. Consumers also may inadvertently share their own personal or sensitive files with others. In addition, consumers who share files may expose themselves to civil or criminal lawsuits by organizations enforcing copyright infringement and pornography laws. Finally, the testimony states, because of the way files are labeled, consumers, including children, may be exposed to unwanted pornographic images.

According to the testimony, the FTC has worked to address the risks to consumers presented by P2P file-sharing software programs through a combination of working with industry to improve the disclosure of risk information on P2P file-sharing sites, consumer education, and targeted law enforcement. The testimony notes that the FTC staff review of risk disclosures on the most popular P2P file-sharing sites showed substantial improvement since 2004.

In addition to protecting consumers by promoting disclosures, the FTC has taken law enforcement actions targeting particularly egregious actions by certain P2P file-sharing operations. Finally, the agency has taken steps to educate consumers and businesses about the potential risks associated with P2P programs and to provide guidance so that they are better able to protect themselves. One consumer alert, “P2P File-Sharing: Evaluate the Risks,” recommends that consumers carefully set up the file-sharing software, checking the proper settings when software is installed, so that they do not inadvertently share personal documents such as tax returns, e-mail messages, or medical records. The alert also recommends that consumers run anti-spyware and anti-virus programs on a regular basis. The Web-based alert has been accessed more than 1.3 million times.

“The FTC will continue to assess the risks associated with P2P file-sharing technology, educate consumers, monitor and encourage industry self-regulation, and investigate and institute law enforcement actions when appropriate in the P2P file sharing arena,” the testimony states.

The Commission vote to authorize the testimony was 5-0.

The FTC works for the consumer 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, click http://www.ftc.gov/ftc/complaint.shtm or call 1-877-382-4357. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to more than 1,600 civil and criminal law enforcement agencies in the U.S. and abroad. For free information on a variety of consumer topics, click http://ftc.gov/bcp/consumer.shtm.