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Mobile phone manufacturer Blue Products, Inc. and its co-owner
and President, Samuel Ohev-Zion (collectively, "BLU"),
reached a settlement with the Federal Trade Commission
("FTC") over allegations that BLU misled consumers by
allowing a China-based third party to collect detailed personal
information about consumers. The FTC alleged that the Chinese
entity collected U.S. consumers text message content, real-time
location information, call logs, and contact lists, without
consumers' knowledge or consent, despite promises by BLU that
it would keep such information private and secure.
The FTC alleged that BLU (i) mislead consumers by falsely
claiming it limited third-party collection of data from users of
BLU's devices to only information needed, and (ii) failed to
implement appropriate physical, electronic and managerial
procedures to protect consumer's personal information,
including failing to perform due diligence of service providers,
failing to have written data security procedures regarding service
providers, and failing to adequately asses the privacy and security
risks of third-party software on BLU devices.
Under the terms of the settlement order, BLU is not only
prohibited from misrepresenting the extent to which it protects the
privacy and security of personal information, but is also required
to implement and maintain a comprehensive data security program
that addresses security risks associated with its mobile devices
and protects consumer information. In addition, BLU will be
subject to third-party assessments of such data security policy
along with record keeping and compliance requirements for twenty
(20) years.
Takeaway: The FTC appears to be ramping
up its enforcement against companies who share data with third
party vendors. All companies that engage third party data
analytics vendors should review the agreements and practices of
those vendors to ensure compliance with a company's privacy
policies and practices.
This article is presented for informational purposes only
and is not intended to constitute legal advice.
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