Sears settles FTC claims regarding its online tracking software

On June 4, 2009, Sears Holdings Corporation (Sears) settled its dispute with the Federal Trade Commission (FTC) regarding Sears's controversial online tracking software.  Sears paid its customers $10 to join "My SHC community" and download  software which would track participants' online behavior.  However, FTC alleged that Sears did not adequately disclose the enormous scope of information Sears collected on the participants:

<...> Sears represented to consumers that the software would track their “online browsing.” The FTC charges that the software would also monitor consumers’ online secure sessions – including sessions on third parties’ Web sites – and collect information transmitted in those sessions, such as the contents of shopping carts, online bank statements, drug prescription records, video rental records, library borrowing histories, and the sender, recipient, subject, and size for web-based e-mails. The software would also track some computer activities that were not related to the Internet.

Sears did disclose the full extent of what information it would monitor, but only "in a lengthy user license agreement, available to consumers at the end of a multi-step registration process", which the FTC deemed to be inadequate. 

Under the settlement, Sears is required to destroy the data collected under this program, and to "clearly and prominently disclose the types of data the software will monitor, record, or transmit" if Sears advertises or disseminates any tracking software in the future.  The FTC also required Sears to make such disclosure prior to installation of the software and separate from any user license agreement; and disclose whether any of the data will be used by a third party.

"Sears Settles FTC Charges Regarding Tracking Software", FTC press release (June 4, 2009).
"Sears settles with FTC in privacy flap", Reuters (June 4, 2009).

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