FTC Takes on Native Advertising, Internet of Things

FTC Pushes Forward on Native Advertising Examination

In June, the FTC sent letters to search engines instructing them to clarify how they display ads within search results since “the features traditional search engines use to differentiate advertising from natural search results have become less noticeable to consumers, especially for advertising  located immediately above the natural results.”  They were particularly concerned about specialized search results where the results were determined by payments from the parties displayed, which the FTC believed should be identified as an advertisement to consumers.

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Now the FTC has up the ante by announcing  a December 4th workshop on this topic.

Increasingly, advertisements that more closely resemble the content in which they are embedded are replacing banner advertisements – graphical images that typically are rectangular in shape – on publishers’ websites and mobile applications.  The workshop will bring together publishing and advertising industry representatives, consumer advocates, academics, and government regulators to explore changes in how paid messages are presented to consumers and consumers’ recognition and understanding of these messages.”

The FTC is advising that it is “premature to say that there will be any next steps following the conference.”

FTC Internet of Things

On November 19th, the FTC will hold another workshop to explore consumer privacy and security issues posed by the growing connectivity of devices. The ability of everyday devices to communicate with each other and with people is becoming more prevalent and often is referred to as “The Internet of Things.” Connected devices can communicate with consumers, transmit data back to companies, and compile data for third parties such as researchers, health care providers, or even other consumers, who can measure how their product usage compares with that of their neighbors. The workshop will bring together academics, business and industry representatives, and consumer advocacy groups to explore the security and privacy issues in this changing world. The FTC just announced its first enforcement action in this area against TRENDnet which markets SecurView cameras for purposes ranging from home security to baby monitoring, and claimed in numerous product descriptions that they were “secure.”  In fact, the cameras had faulty software that left them open to online viewing, and in some instances listening, by anyone with the cameras’ Internet address.

According to the complaint, in January 2012, a hacker exploited this flaw and made it public, and, eventually, hackers posted links to the live feeds of nearly 700 of the cameras.  The feeds displayed babies asleep in their cribs, young children playing, and adults going about their daily lives.  Once TRENDnet learned of this flaw, it uploaded a software patch to its website and sought to alert its customers of the need to visit the website to update their cameras.Under the terms of its settlement with the Commission, TRENDnet is prohibited from misrepresenting the security of its cameras or the security, privacy, confidentiality, or integrity of the information that its cameras or other devices transmit. In addition, the company is barred from misrepresenting the extent to which a consumer can control the security of information the cameras or other devices store, capture, access, or transmit. In addition, TRENDnet is required to establish a comprehensive information security program designed to address security risks that could result in unauthorized access to or use of the company’s devices, and to protect the security, confidentiality, and integrity of information that is stored, captured, accessed, or transmitted by its devices.  The company also is required to obtain third-party assessments of its security programs every two years for the next 20 years. The settlement also requires TRENDnet to notify customers about the security issues with the cameras and the availability of the software update to correct them, and to provide customers with free technical support for the next two years to assist them in updating or uninstalling their cameras.