FTC Requires Audits of Internet Firms
In the past few years, privacy audits have emerged as the FTC’s favorite tool for compliance. At the end of settlements with the Federal Trade Commission, the FTC often requires companies that were found in violation of privacy rules to undergo privacy audits. For example, companies such as Google, Facebook, MySpace, and Path must all open their doors to audits from the FTC to ensure that they continue to comply with privacy rules. All of these companies, as part of settlement negotiations, agreed to create comprehensive privacy programs, which includes identifying risks and assigning employees in charge of privacy to establish safeguards against future violations. The audits are often conducted by independent companies, such as KPMG or PricewaterhouseCoopers. While, some criticize the audits as mere paper shuffling and ineffective methods to prevent future privacy violations, the audits to make companies pause to reconsider their internal operations.
Audits often show that many companies fail to update their privacy policies when they change their products or services. “It’s one thing to write the policies,” says Darin Klemchuk, partner at Klemchuk Kubasta LLP, “but what is most important is that companies set up internal protocols to ensure that these policies are followed and updated regularly. Updating privacy policies and monitoring internal privacy controls should be an ongoing practice for companies.”
While few companies undergo voluntary audits, such audits could help companies learn if their privacy programs meet acceptable standards and avoid actions brought on by the FTC.
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