Sears settles with FTC over online tracking

IDG News Service - Sears Holdings Management has agreed to settle a complaint from the U.S. Federal Trade Commission that it failed to tell customers about the wide range of their personal information, including bank statements and prescription records, it collected through a downloadable software application, the FTC said.

Sears Holdings, owner of the Sears and Kmart retail chains, invited some visitors of Sears.com and Kmart.com to become members of the "My SHC Community," paying them $10 if they agreed to download "research" software that would confidentially track their online browsing.

However, the software not only tracked browsing, but also monitored customers' online secure sessions, including sessions on third-party Web sites, the FTC said. The Sears software collected the contents of shopping carts, online bank statements, drug prescription records, video rental records, library borrowing histories, and the sender, recipient, subject, and size of Web-based e-mail messages, the FTC said.

The software would also track some computer activities that were unrelated to the Internet, the FTC said.

Sears asked these customers to "participate in exciting, engaging, and ongoing interactions -- always on your terms and always by your choice."

Sears, in a statement, said the research project ended a year ago. The software was removed after the project and all personal information was destroyed, Sears said. No similar studies are planned, the company added.

"Sears Holdings takes the safety and security of our customers' private information very seriously," the company's statement said. "The company conducted a research project nearly two years ago with a small panel of consumers who were recruited online to better understand the surfing behavior of U.S. retail customers. The panelists were informed up front of the nature of the work being conducted and were paid for their participation in the study. At all times, Sears Holdings ensured the privacy and security of the personal information of all participants who enrolled in the program."

A proposed settlement would require Sears to stop collecting data from the consumers who downloaded the software and to destroy all data it had previously collected.

If Sears advertises or disseminates any tracking software in the future, it must clearly and prominently disclose the types of data the software will monitor, record, or transmit, under the settlement terms. The disclosure must be made prior to installation and separate from any user license agreement. Sears must also disclose whether any of the data will be used by a third party, the FTC said.

The agreement will be subject to public comment for 30 days, beginning today through July 6, after which the FTC will decide whether to make it final. To file a public comment, go to the FTC Web site.