Amazon Dodges Another Bullet

Amazon.com dodged another FTC probe today when the agency’s staff concluded that although the online retailer likely engaged in some deceptive business practices regarding the privacy of users of its Alexa service, no enforcement action is contemplated.

The mistake occurred when Amazon said that it did not keep personally identifiable information in Alexa’s database of surfing patterns, the FTC said in a recent letter to Amazon’s lawyers. The letter was signed by C. Lee Peeler, associate director of the Federal Trade Commission’s Division of Advertising Practices.

However, no enforcement action was recommended because Alexa revised the statements on its Web site to “to more accurately reflect its information practices,” the letter said. Also, the original complaint had involved the zBubbles comparison shopping service, which is no longer being operated.

Alexa offers users a free browser toolbar that lets consumers “see Site Statistics, Contact Info, Related Links and Related Shopping …” for the sites they visit. Amazon acquired the company in April of 1999.

Amazon was down $1.36 in early afternoon trading to $15.94, but Internet shares in general were taking a beating.

Last Friday, Amazon.com scored a victory when the Federal Trade Commission rejected a petition from privacy advocates claiming that Amazon violated the law by making changes in its privacy policy last year.

Regarding today’s developments, Junkbusters President Jason Catlett said: “This sends a deplorable message to corporate America: feel free to cheat people out of their privacy until you get caught, and then you’ll be let off. The FTC’s current system for protecting privacy is about as effective as using a flashlight for eradicating cockroaches: on the rare occasion targets get found, they simply scurry away.”

The FTC letter today noted that Amazon recently reached a settlement in a federal class action lawsuit regarding information collection practices. The letter said that the settlement (roughly $2 million; no admission of wrongdoing) “provides for certain protections for Alexa and zBubbles users, including the deletion of certain previously collected personally identifiable information.”

Details of that settlement are available here.

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