WASHINGTON - The Federal Trade Commission finished a settlement with on Friday over allegations that the company had violated its privacy policy, and in the process said it would re-examine its own practice of allowing companies to settle charges of wrongdoing while denying that they had done anything wrong.
The F.T.C.'s turnabout came in response to a blistering dissent from the Facebook settlement by one commissioner, J. Thomas Rosch, who said that allowing the company to deny charges it was agreeing to settle undermined the commission's authority.
In November, the F.T.C. said that Facebook had deceived consumers by telling them that their personal information would be kept private, while “repeatedly allowing it to be shared and made public.â€
The commission voted 3-1, with one abstention, to impose a 20-year consent order requiring Facebook to protect its users' privacy. The company agreed to give consumers clear and prominent notice and to obtain their express consent before revealing information beyond their previously stated privacy settings, to maintain a comprehensive program to safeguard private information, and to obtain an independent privacy audit every two years.
Facebook said in a statement on Friday, “We are pleased that the settlement, which was announced last November, has received final approval.†The company did not repeat its assertion, made in November, that it “expressly denies the allegations set forth in the complaint,†but the F.T.C. still considers that statement to be part of the case record.
A Facebook spokesman declined to comment beyond the company's one-sentence statement.
Mr. Rosch agreed with the general outlines of the Facebook settlement, but wrote in his dissent that the Federal Trade Commission Rules of Practice “do not provide for such a denial†of the charges.
He also advocated further tightening of the commission's rules, which in addition to outright denial allow a settling company to say that its agreement “is for settlement purposes only and does not constitute an admission by any party that the law has been violated.†That is tantamount to a denial, Mr. Rosch said, and should be disallowed.
Mr. Rosch also dissented from the F.T.C.'s settlement with Google on Thursday and in at least one earlier case. The Google settlement allowed the company to deny charges that it misrepresented whether it would place tracking cookies on Apple's Safari browser.
The F.T.C. is not the only federal agency that allows a company to deny facts that it seems to be conceding. In July, the Justice Department settled a case with the pharmaceutical maker GlaxoSmithKline in which the company agreed to pay $2 billion to settle civil charges that it defrauded the government with drug sales. Despite the payment, Glaxo expressly denied that it had engaged in any wrongful conduct.
An example of a more concrete policy, Mr. Rosch said, can be found in the Securities and Exchange Commission's rules, which ban a company that settles a case from denying that it committed the acts in question.
The S.E.C. also states that “a refusal to admit the allegations is equivalent to a denial, unless the defendant or respondent states that he neither admits nor denies the allegations.†That rule would disallow the F.T.C.'s language that a settlement “does not constitute an admission†of guilt.
“I can live with ‘neither admits nor denies,' †Mr. Rosch said. “That's what we did in the old days.†But with the more recent examples, he said, “We're inviting denials of liability in every case in the future.â€
The S.E.C.'s policy, however, has itself been a subject of dispute. A federal judge in Manhattan refused to approve an S.E.C. settlement with Citigroup last year, saying that the agency's policy of allowing a company to neither admit nor deny allegations gave him no basis on which to judge whether the settlement was in the public interest.
The case, heard by Judge Jed S. Rakoff of Federal District Court in Manhattan, is now being considered by a federal appeals court.
A majority of the F.T.C. commissioners disagreed with Mr. Rosch's statement that a denial by a settling company undermined the outcome. They argued that the record of the investigation adequately supported the settlement, regardless of what the company claimed.
But the three commissioners added that they were open to Mr. Rosch's idea, saying they wanted “to avoid any possible public misimpression that the commission obtains settlements when it lacks reason to believe that the alleged conduct occurred.â€
In the future, “express denials will be strongly disfavored,†the commissioners said. And in the coming months, they added, the commission will consider whether to modify its policy.
