March 11, 2005
An Internet software company that designs a shopping cart program
for thousands of online businesses agreed yesterday to settle FTC (Federal
Trade Commission) charges that it leased or sold personal consumer
information and sensitive personal data to Internet marketers, despite
several promises to merchants and to consumers that it wouldn't distribute
or sell any of the lists.
CartManager International, a Utah-based software company, collected the personal data of nearly one million people and turned around and rented the data without their consent to marketers, according to the FTC.
The settlement requires CartManager to give up the $9,101.63 it made by selling the information and ensure that consumers receive a clear and conspicuous notice before their personal information is disclosed to other companies, said the FTC.
The commission will also monitor the company to make sure it remains in compliance with the regulations.
The FTC said the online merchants were not aware of CartManager's practices.
"Companies and service providers must make sure that their privacy policies are in sync," Lydia Parnes, acting director of the FTC's Bureau of Consumer Protection, said in a written statement.
Information requests asking consumers to provide their names, addresses, phone numbers, e-mail addresses and credit card numbers are standard to most shopping cart services. However, customers usually don't expect that information to be sold to other vendors.
With the CartManager software, pages are designed to look like the merchant's Web Site, but they are actually located on the CartManager site, said the FTC.
"At the same time, merchants have an obligation to know what their service providers are doing with consumers' personal information."
The FTC said that CartManager did not inform consumers or merchants that it was also collecting the data for the purpose of selling it.
This latest data breach joins a steadily growing list of personal information scandals that have pushed the issue of protecting data into the American mainstream.
As previously reported by internetnews.com, a breakdown in protecting information at ChoicePoint prompted Congress to take special action.
"New technologies, new private-public domestic security partnerships, and the rapid rise of giant information brokers that collect and sell personal information about each and every American have all combined to produce powerful new threats to privacy," Vermont Democratic Sen. Patrick Leahy said in a statement at the time of the ChoicePoint scandal. "It's time to turn some sunshine on these developments so the public can understand how and why their personal information is being used."
The settlement also bars the company from using personal data already collected.
Source: Internet News
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