In the middle of 2009 the Federal Trade Commission filed a complaint against Sears Holdings Management Corporation (SHMC) for unfair or deceptive acts or practices affecting commerce.
On September 9, 2009 the FTC approved a consent decree with SHMC requiring full disclosure of its activities and destruction of previously obtained information.
"[1] This revelation was buried amongst a lot of other text describing more overt participation in the community such as: We'll ask you to journal your shopping and purchasing behavior.
[1] Most of the content of the email focused upon direct participation in the online community, with only limited references to the application that would be collecting massive amounts of information.
The complaint noted the lack of system tray icon or other visible indication other than "srhc.exe" being listed as a running process in Windows Task Manager.
"[1] Because the application "monitor[ed] nearly all of the Internet behavior that occurs on consumers' computers" including detailed transaction information with websites not affiliated with SMHC and then transmitted that information to SHMC remote servers, the minimal disclosures provided in the email and buried in the license agreement were inadequate.
§ 45) grants the FTC power to investigate and prevent deceptive trade practices, this decision came as a surprise to a number of legal observers.
The ruling suggests that companies have a duty to appropriately set consumer expectations and they cannot rely upon the fiction that users have read license agreements.
[6] This theory of privacy and the complaint and subsequent consent decree are based upon the FTC Fair Information Practice principles (FIPs).
This set of principles focus upon requiring full disclosure of the data being collected so that users can make informed decisions about whether to participate.
[7] The Network Advertising Initiative was launched to help manage public concern over this issue, which came to a head during the Facebook Beacon scandal.