FTC imposes record-breaking $5 billion penalty on Facebook

Created date

September 27th, 2019
A sign features the words Scam Alert

On the surface, social media seems wonderful. Sites like Facebook, Instagram, and Twitter allow millions of people to reconnect with old friends, keep in touch with distant loved ones, and make new friends with similar interests. 

Each day, more than 185 million people in the U.S. and Canada log in to Facebook, and when that happens, Facebook monetizes each user’s information through targeted advertising. That’s how they make money—a lot of money. In 2018, the company made $55.8 billion. 

Knowing that people don’t like feeling like “Big Brother” is watching, Facebook allows users to control their personal information through privacy settings. In a move designed to alleviate people’s fears, Facebook even offered users the option of making their personal information available only to those deemed “friends” on the site. 

However, it appears that was a lie. Facebook allowed apps used by those friends to access people’s information—a move that Facebook profited from financially. 

Misleading Facebook users

In 2012, the Federal Trade Commission (FTC) sued Facebook for misleading consumers about the extent to which they could keep their personal information private. The social media site apologized, paid a fine to the FTC, and promised to do better.

They didn’t. They continued to inappropriately access consumer data, so in July, the FTC imposed a record-breaking $5 billion penalty on Facebook. It was the largest penalty ever imposed on any company for violating consumers’ privacy and almost 20 times greater than the largest privacy or data security penalty ever imposed worldwide. 

If you are a Facebook user, you might want to know if any of that money is coming your way. Sadly, the answer is no. By law, that $5 billion will go into the general fund of the U.S. Treasury. Let’s hope they put it to good use!

Moving forward, the order imposes significant new privacy requirements, including:

• Facebook must exercise greater oversight over third-party apps. 

• Facebook must provide clear and conspicuous notice of its use of facial recognition technology and obtain user consent before using that information for any other purpose.

• Facebook must establish, implement, and maintain a comprehensive data security program.

• Facebook is prohibited from asking for email passwords to other services when consumers sign up for its services.

“Despite repeated promises to its billions of users worldwide that they could control how their personal information is shared, Facebook undermined consumers’ choices,” says FTC Chairman Joe Simons. “The commission takes consumer privacy seriously and will enforce FTC orders to the fullest extent of the law.”

To protect your privacy, don’t simply accept a site’s default settings. Go to the settings page and explore your options. And check back on that settings page from time to time to make sure nothing has changed.

In response to this latest revelation, many people have quit Facebook altogether. The site is free for users, but for them, having their personal information misused for Facebook’s profit was too high a price to pay.