Online Marketers Face Scrutiny Over User Privacy

Online marketing programs from Facebook and Sears that potentially compromise users privacy faced scrutiny in September.

Under the terms of a $9.5 million class-action settlement, Facebook agreed to terminate Beacon, a controversial marketing venture launched in 2007. Beacon broadcasted a Facebook member's online transactions with affiliated businesses, such as movies reserved at Blockbuster or diamond rings purchased on Overstock.com, on the user's homepage and profile.

In addition to snuffing out Beacon, Facebook agreed to create a privacy foundation dedicated to privacy education and preservation on the Web. The non-profit will "fund projects and initiatives that promote the cause of online privacy, safety and security," according to the settlement.

In a separate action, the Federal Trade Commission (FTC) ordered Sears to destroy any information it collected through software it invited customers to download onto their computers. The software not only tracked consumer browsing habits on Sears' Web site but also collected user information such as bank statements and prescription drug records from third-party sites without proper disclosure, according to the FTC charges.

From here on out, Sears must plainly disclose what types of information it intends to collect through tracking software, as well as whether that information will be used by a third party, the FTC ordered.

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