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Federal Trade Commission (FTC) Settles With Businesses Who Allegedly Misrepresented US-EU Safe Harbor Certification

Beware: Even if your company substantially complies with the Privacy Principles of the US-EU Safe Harbor, failure to annually re-certify can land you in hot water.

Twelve US businesses—ranging from sports teams, to software and consumer product companies, to Internet giants—have recently agreed to settle Federal Trade Commission (FTC) charges that they falsely claimed compliance with the US-EU Safe Harbor, an international privacy framework.


The US-EU Safe Harbor is a voluntary, simplified and cost-effective means for US entities to comply with European privacy regulations. The European Commission’s Directive on Data Protection[1] prohibits the transfer of personal data to non-European Union countries that do not meet the European Union (EU) “adequacy” standard for privacy protection. The US-EU Safe Harbor framework, developed by the US Department of Commerce in consultation with the European Commission, is a voluntary, streamlined and cost-effective means for US entities to self-certify compliance and be deemed to have “adequate” privacy protection under the EU standard. Such a certification enables US entities to engage in uninterrupted business dealings with the EU and avoid prosecution by EU member state authorities for data transfers to the United States due to the failure of US law generally to meet the “adequacy” requirement. All 28 member states of the EU are bound by the European Commission’s finding of “adequacy” for compliant organizations.

To obtain and maintain certification under the Safe Harbor, participating organizations must both (1) comply with the seven Safe Harbor Privacy Principles,[2] and (2) annually self-certify their compliance to the US Department of Commerce.

Participating organizations can highlight their compliance with the US-EU Safe Harbor to consumers by, among other ways, displaying the Safe Harbor mark on their websites or citing their certification in their privacy policies.

Enforcement authority for the Safe Harbor is held by the FTC, certain other US government agencies and/or state authorities, depending on the participating entity’s industry sector.

The FTC Settlement

The FTC recently filed complaints against 12 US companies for allegedly violating Section 5 of the FTC Act, which bans entities from engaging in unfair or deceptive acts or practices in interstate commerce. According to the complaints, these companies falsely represented that they held current Safe Harbor certifications, through statements in their privacy policies or display of the Safe Harbor certification mark, when their certifications had actually lapsed due to failure to re-certify. Such conduct does not necessarily mean that the companies committed any substantive violations of the Safe Harbor Privacy Principles, only that they misrepresented the status of their certifications.

On January 21, 2014, the FTC announced the parties’ intent to enter into settlement agreements regarding the FTC’s charges. The proposed settlement agreements prohibit the companies “from misrepresenting the extent to which they participate in any privacy or data security program sponsored by the government or any other self-regulatory or standard-setting organization.”[3]

What You Need to Know on Self-Certifying Compliance with the US-EU Safe Harbor Framework

  1. Confirm Eligibility for the Safe Harbor: Any US organization that is subject to the jurisdiction of the FTC, or that is a US air carrier or ticket agent subject to the jurisdiction of the Department of Transportation, may participate in the Safe Harbor.

  2. Develop a Safe Harbor-Compliant Privacy Policy Statement: As a prerequisite for submitting a self-certification to the Department of Commerce, develop a Safe Harbor-compliant privacy policy and maintain that privacy policy.

  3. Establish an Independent Recourse Mechanism: A self-certifying organization needs to establish, prior to self-certification, an independent recourse mechanism to investigate and remedy disputes between consumers and the organization, and redress problems arising out of the organization’s failure to comply with the Privacy Principles. 

  4. Ensure That the Verification Mechanism Is in Place: A self-certifying organization must have procedures in place for verifying compliance; either self-assessment or third-party assessment verification programs are acceptable.

  5. Designate a Safe-Harbor Contact: A self-certifying organization must provide a contact to handle any questions, complaints, access requests or other issues arising under the Safe Harbor.

  6. Annually Reaffirm the Commitment to the Safe Harbor Framework: A self-certifying organization must reaffirm—through the Safe Harbor website, by email or by sending a letter—its pre-existing certification on or before the anniversary of the date on which the original self-certification was finalized. 

[1] Directive 95/46/EC.

[2] The Safe Harbor Privacy Principles are: (1) notice, (2) choice, (3) onward transfer (transfers to third parties), (4) access, (5) security, (6) data integrity and (7) enforcement.

[3] http://www.ftc.gov/news-events/press-releases/2014/01/ftc-settles-twelve-companies-falsely-claiming-comply

©2023 Katten Muchin Rosenman LLPNational Law Review, Volume IV, Number 36

About this Author

Claudia Callaway, Litigation Lawyer, Katten Muchin

Claudia Callaway is chair of Katten’s Consumer Finance Litigation practice and co-chair of the Class Action and Multidistrict Litigation practice. She focuses her practice on the defense of state and federal class actions regarding consumer protection and consumer finance laws and representation of clients before the Consumer Financial Protection Board (CFPB), the Federal Trade Commission (FTC) and state banking agencies.

Claudia represents consumer lenders, third-party debt collectors and other consumer  financial services clients in class action suits and...


Tanya L. Curtis is the national co-chair of the Technology practice and focuses on intellectual property, information technology, privacy, and e-business and other Internet-related matters.

Tanya’s substantial intellectual property experience includes counseling clients on the identification, selection, clearance, registration and protection of trademarks and domain names, as well as the identification, development and protection of copyrights, rights of publicity, and trade secrets and other confidential business information; managing the day-to-day...

Leonard A. Ferber, Corporate legal Specialist, Katten Muchin Law Firm

Leonard A. Ferber, co-head of Katten’s Technology practice, focuses his practice on technology transactions, representing both technology developers and large corporate users of technology.

Len represents early stage and mature software and other technology-based companies and consulting firms in a variety of transactional matters, including strategic partnering arrangements and joint ventures, sophisticated licensing arrangements (both in-bound and out-bound), and technology development and acquisition agreements. These clients include businesses distributing...

Doron Goldstein, Katten Muchin Law Firm, Intellectual Property Attorney

Doron S. Goldstein's practice primarily deals with intellectual property, information technology and advertising, marketing and branded entertainment transactions and counseling, including privacy and information security, trademark, copyright, software and technology matters, and he is co-head of Katten's Advertising, Marketing and Promotions practice and of the firm's Privacy, Data and Cybersecurity group.

Doron regularly advises on various aspects of integrated marketing campaigns, including talent and production agreements, advertising agency...