The FTC issued warnings to five tax preparation companies against using or disclosing consumer tax data for unrelated purposes like advertising without explicit consent. The agency cites its penalty offense authority, referencing a previous case against Beneficial Corp, and warns that such practices violate the FTC Act and could incur penalties up to $50,120 per violation. The notices highlight that using tracking technologies for data collection without consent is also prohibited.
In-house legal teams should review customer service agreements, privacy policies, and vendor contracts (especially with analytics/advertising partners) for clauses governing data usage purposes, consent requirements, and tracking technology disclosures. Specific clauses to audit include: (1) data purpose limitations ensuring tax data is only used for tax preparation; (2) consent mechanisms for any secondary uses like advertising or data sharing; (3) restrictions on sharing confidential tax information with third parties; (4) transparency requirements for tracking technologies (e.g., cookies, pixels). Updates may be needed to add explicit, granular consent for non-tax purposes, prohibit unauthorized data sharing, and ensure all tracking tools are disclosed with opt-in consent where required. Data processing agreements with vendors should also reflect these restrictions.
Entity
Five tax preparation companies
Also known as: Tax Preparation Companies
Industry
Financial ServicesOfficial Press Release
https://www.ftc.gov/news-events/news/press-releases/2023/09/ftc-warns-tax-preparation-companies-about-misuse-consumer-data
NPO Recipients Misuse Information Collected Confidential Con
https://www.ftc.gov/system/files/ftc_gov/pdf/NPO-Recipients-Misuse-Information-Collected-Confidential-Contexts.pdf
NPO Misuse Information Collected Confidential Contexts Cover
https://www.ftc.gov/system/files/ftc_gov/pdf/NPO-Misuse-Information-Collected-Confidential-Contexts-Cover-Letter_0.pdf
Beneficial Corporation Complaint 0
https://www.ftc.gov/system/files/ftc_gov/pdf/Beneficial-Corporation-Complaint_0.pdf
Federal Trade Commission Enforcement Page
https://www.ftc.gov/enforcement
"five tax preparation companies"
"under the FTC Act"
"without first obtaining affirmative express consent from consumers"
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