Fraud Management & Cybercrime , Governance & Risk Management , Privacy

Judge Approves FTC's $5 Billion Settlement With Facebook

Privacy Advocates Objected to the July 2019 Agreement
Judge Approves FTC's $5 Billion Settlement With Facebook

Nearly 10 months after Facebook and the U.S. Federal Trade Commission agreed to a record-setting $5 billion settlement over misuse of user data, a federal judge has finally signed off on the deal, while questioning the adequacy laws governing major technology firms.

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Judge Timothy J. Kelly of the U.S. District Court for the District of Columbia announced his final approval of the settlement Friday, saying the social media giant's violation of U.S. law was "unscrupulous" and "stunning."

"These allegations, and the briefs of some amici [friend of the court], call into question the adequacy of laws governing how technology companies that collect and monetize Americans’ personal information must treat that information," Kelly wrote in his order.

If similar issues with Facebook surface again, Kelly wrote, the court "may not apply quite the same deference to the terms of a proposed resolution."

Facebook and the FTC reached the settlement in July 2019, but it was subject to judicial approval. Facebook agreed to implement measures to protect personal information, including the formation of an independent privacy committee and the submission of quarterly and annual reports to the FTC to ensure compliance (see: It's Official: FTC Fines Facebook $5 Billion)

The FTC investigation into Facebook started in March 2018 as a result of the Cambridge Analytica controversy over how the now-defunct voter profiling firm improperly obtained profile data for 87 million Facebook users without their consent.

Objections Raised

Privacy and consumer advocacy groups, including the Electronic Privacy Information Center, claimed that the settlement did not go far enough to change Facebook's business practices and raised those objections with the judge (see: Facebook's FTC Privacy Settlement Challenged in Court)

After the settlement was announced, EPIC said it would continue to monitor the situation to help ensure that the FTC enforces its orders and that Facebook complies with the settlement.

FTC and Facebook React

FTC Chairman Joe Simons, a Republican, said the commission was pleased with the court's approval, and he noted that the settlement would require Facebook to consider privacy at every stage of its business operations.

In a blog post after judge’s decision was announced, Facebook's Chief Privacy Officer Michel Protti said that the agreement has already brought "fundamental changes" to the company, including better privacy protections for users.

"We’re off to a good start, with much of the work required by the agreement already underway," Protti notes.

Facebook is creating a privacy committee of independent representatives from outside the social media firm to advise its board, and the company will work with a third-party privacy and compliance assessor, who will report directly to the committee, Protti notes.

Some Call for New Privacy Law

Some lawmakers have called for enactment of a new federal privacy law to regulate the way companies such as Facebook collect and use consumers' data.

In February, for example, Sen. Kirsten Gillibrand, D-N.Y., proposed creating a new federal agency dedicated to protecting online privacy, taking that task away from the FTC (see: Senator Calls for Creation of Federal Online Privacy Agency).

Gillibrand's bill, Data Protection Act of 2020, remains in committee.

About the Author

Ishita Chigilli Palli

Ishita Chigilli Palli

Senior Correspondent, Global News Desk

As senior correspondent for Information Security Media Group's global news desk, Ishita covers news worldwide. She previously worked at Thomson Reuters, where she specialized in reporting breaking news stories on a variety of topics.

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