Five tax preparation companies have been warned by the Federal Trade Commission (FTC) in regards to what information can and can't be shared for outside purposes.
The FTC is using its penalty offense authority to remind tax preparation companies of the law and deter them from breaking it. By sending a Notice of Penalty Offenses, the agency is warning recipients they could incur civil penalties of up to $50,120 per violation if they misuse personal data in ways that run counter to the original purpose for which this information was collected.
In the notices sent to the tax preparation companies, the FTC warned that the following practices may be deceptive or unfair under the FTC Act if companies fail to first obtain affirmative express consent from consumers:
- using information collected in a context where an individual reasonably expects that such information will remain confidential for purposes not explicitly requested by the individual.
- using such information to obtain a financial benefit that is separate from the benefit generated from providing the product or service requested by the individual.
- using such information to advertise, sell or promote products or services.
The notices further warn that it is unlawful to make false, misleading or deceptive representations concerning the use or confidentiality of such information. The FTC specifically warned the companies that it considers it an unfair or deceptive practice to use tracking technologies such as pixels, cookies, APIs or SDKs to amass, analyze, infer or transfer personal information in the ways outlined above without first obtaining consumers’ express consent.