FTC Grants Sears’ Petition to Reopen and Modify Consent Order Based on Changed Conditions of Fact
This week, the Federal Trade Commission (“FTC”) granted Sears Holdings Management’s (“Sears”) petition to reopen and modify a 2009 consent order regarding the tracking of personal information on Sears’ software apps. We analyzed Sears’ petition last fall, which sought to modify the definition of “tracking application,” which triggered heightened notice and consent requirements under the order. The FTC modified the definition such that it now excludes from the heightened notice and consent requirements mobile app tracking of that app’s configuration, functionality, and “consumers’ use of the program or application itself.”
With nearly a decade having passed since its original order, the FTC determined that “changed conditions of fact” required it be reopened. The FTC specifically noted that the mobile app marketplace was only in its infancy when it originally issued the 2009 order, and acknowledged that consumers of today’s mobile apps generally expect the collection and transmission of many different types of data to support app services. The FTC also acknowledged that its 2009 order’s heightened notice and consent requirements applied “even to the most mundane mobile application” activities, which made those requirements impractical “because they were unnecessary.” The FTC also noted that Sears’s proposed definition of “tracking application” was comparable to definitions from more recent FTC orders. Because the FTC based its decision on these changed conditions of fact in the app marketplace, it did not consider Sears’ proposed alternative ground for relief, which claimed that modification of the order would be in the public interest.
Twelve public comments were filed in response to Sears’ petition, all of which opposed modification of the consent order. Many comments raised general concerns about data collection. Although the FTC acknowledged their “concerns about maintaining the Order’s strong protections for consumer privacy,” it believed that modifying the order would “continue to fulfill the goal of maintaining strong protections for privacy, without unduly burdening consumers or Sears.” The FTC also addressed arguments that the proposed language excepting “tracking applications” from heightened notice and consent requirements would: (1) allow for a greater degree of information collection than prior FTC orders; (2) allow Sears to engage in unexpected methods of data tracking or collection (e.g., key logging, third-party tracking); and (3) enable evading of mobile operating system’s built in notice and consent system when accessing device data. However, the FTC dismissed all three arguments, explaining that the “proposed exception better aligns with consumers’ expectations” as to the functionality and use of current mobile apps.
Historically, petitions asking the FTC to reconsider previous orders are unusual, but they may become more common going forward as changes in technology render the FTC’s previous decisions too onerous.