Amazon Dodges Another Bullet

Amazon.com dodged another FTC probe today when the agency’s
staff concluded that although the online retailer likely engaged in some
deceptive business practices regarding the privacy of users of its Alexa
service, no enforcement action is contemplated.


The mistake occurred when Amazon said that it did not keep personally
identifiable information in Alexa’s database of surfing patterns, the FTC
said in a recent letter to Amazon’s lawyers. The letter was signed by C. Lee
Peeler, associate director of the Federal Trade Commission’s Division of
Advertising Practices.


However, no enforcement action was recommended because Alexa revised the
statements on its Web site to “to more accurately reflect its information
practices,” the letter said. Also, the original complaint had involved the
zBubbles comparison shopping service, which is no longer being operated.


Alexa offers users a free browser toolbar that lets consumers “see Site
Statistics, Contact Info, Related Links and Related Shopping …” for the
sites they visit. Amazon acquired the company in April of 1999.


Amazon was down $1.36 in early afternoon trading to $15.94, but Internet
shares in general were taking a beating.


Last Friday, Amazon.com scored
a victory
when the Federal Trade Commission rejected a petition from
privacy advocates claiming that Amazon violated the law by making changes in
its privacy policy last year.


Regarding today’s developments, Junkbusters President Jason Catlett said:
“This sends a deplorable message to corporate America: feel free to cheat
people out of their privacy until you get caught, and then you’ll be let off.
The FTC’s current system for protecting privacy is about as effective as
using a flashlight for eradicating cockroaches: on the rare occasion targets
get found, they simply scurry away.”


The FTC letter today noted that Amazon recently reached a settlement in a
federal class action lawsuit regarding information collection practices. The
letter said that the settlement (roughly $2 million; no admission of
wrongdoing) “provides for certain protections for Alexa and zBubbles users,
including the deletion of certain previously collected personally
identifiable information.”


Details of that settlement are available here.

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