Sears Wants FTC to Revisit 2009 Tracking App Settlement

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By Jimmy H. Koo

Dramatic changes in mobile technology since Sears Holding Management Corp. signed a 2009 FTC consumer privacy settlement merit a reconsideration of the pact, the retail giant argued in a recent petition to the regulator.

The Federal Trade Commission routinely includes a 20-year continuing oversight and compliance provision in its privacy and data security enforcement action settlement agreements with companies. The resolution of the claim by Sears that the long-term FTC oversight doesn’t jibe with fast-evolving technology may have implications for every other company that agreed to such oversight terms.

According the FTC’s administrative complaint, consumers were able to download the Sears app on their computers. Sears told consumers that its app would track their “online browsing,” but allegedly failed to disclose that it also monitored consumers’ activities on third parties’ websites. The settlement prohibited Sears from collecting data from consumers who downloaded the software, and ordered the company to destroy all previously collected data.

Seeking to modify the definition of a “tracking application,” Sears argued that the 2009 order failed to account for the dramatic growth in the app industry and unnecessarily restricts the company’s ability to compete in the marketplace.

“An all encompassing preclusion from monitoring any data outside of that defined, may not aid the customer in the long run,” Linda Sharp, associate general counsel at computer software company ZL Technologies, told Bloomberg Law Nov. 9. Companies often collect data to build better and more efficient products, she said.

Tracking Application

Under the FTC order, a tracking application means any software program or application capable of monitoring, recording, or transmitting information about activities occurring on computers on which it is installed, or about data that is stored on, created on, transmitted from, or transmitted to the computers on which it is installed.

The petition seeks to modify the definition to allow monitoring, recording, or transmitting information to configure the app, and to analyze whether the app is functioning properly and if the information is regarding consumer use of the app.

Sears said the order defines tracking applications too broadly, and applies to “nearly all software on all platforms, including those that bear little relation to the desktop software” involved in the enforcement action.

The FTC Nov. 8 asked for public comment on the petition. Public comments may be submitted until Dec. 8.

To contact the reporter on this story: Jimmy H. Koo in Washington at jkoo@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

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