Security And Privacy Certification Service Nailed For Misleading Customers

FTC alleges that ControlScan offered 'little or no verification' of site security or privacy

Feb 25, 2010 | 05:45 PM

By Tim Wilson

ControlScan, a company that consumers have relied on to certify the privacy and security of online retailers and other Websites, has agreed to settle Federal Trade Commission charges that it misled consumers about the steps it took to verify their privacy and security practices.

The settlements will bar future misrepresentations. The founder and former CEO has entered into a separate settlement that requires him to give up $102,000 in ill-gotten gains.

Third-party privacy and security certification programs, like ControlScan, are used by Websites to assure visitors their sites are secure and that consumers can feel confident about providing personal and financial information. ControlScan provides privacy and security "seals" to assure users that an independent third party is auditing the sites' practices.

ControlScan offers a variety of privacy and security seals for display on sites. Consumers click on the seals to discover exactly what assurances each seal conveys. For example, the company's Business Background Reviewed, Registered Member, and Privacy Protected seals convey that ControlScan has verified a site's information security practices.

However, the FTC alleges ControlScan provided these seals to sites with "little or no verification" of their security protections. Similarly, the FTC alleges the company provided its Privacy Protected and Privacy Reviewed seals to Websites with "little or no verification" of their privacy protections.

The FTC also charged that although ControlScan's seals displayed a current date stamp, the company did not review any of the seal sites on a daily basis. In some instances, Websites were reviewed only weekly, and in other instances ControlScan did no ongoing review of a company's fitness to continue displaying seals. The FTC charged the defendants' deceptive acts violated federal law.

The consent agreement settling the case with Richard Stanton, the founder and former CEO of ControlScan, bars him from misrepresenting the steps that are taken to verify a site's privacy and security protections. He also is barred from misrepresenting the frequency of verification. The settlement requires he give up $102,000 in ill-gotten gains.

The settlement with ControlScan bars the same misrepresentations, requires it to notify the sites that have displayed the seals of the FTC action, and requires them to take down the seals. Finally, a judgment of $750,000 is suspended, based on ControlScan's inability to pay.

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