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"
$750K
The FTC finalized an order against Vanilla Chip LLC (doing business as TruHeight) and its principals for deceptively advertising height-enhancing supplements for children and teens without scientific evidence. The company also used fake reviews and incentivized 5-star ratings. The order requires a $750,000 payment and prohibits false health claims and deceptive review practices.
$2.3M
The FTC alleged that RentGrow, a tenant screening company, violated the Fair Credit Reporting Act (FCRA) by failing to use reasonable procedures to ensure the accuracy of its reports, including by reporting duplicate records and failing to disclose data sources. RentGrow agreed to pay a $2.25 million penalty and is prohibited from further FCRA violations and from misrepresenting dispute outcomes.
The FTC and New York Attorney General took action against Handy Technologies for deceptive earnings claims and failure to disclose fees and fines that led to millions of dollars being withheld from workers' wages. The FTC is sending over $2.7 million in refunds to 62,893 affected consumers.
$35.0M
The FTC alleged that Hopper, a travel booking app, charged consumers hidden and pre-selected fees (Tip and VIP Support) without their consent, misrepresented the benefits of VIP Support and Price Freeze services, and failed to clearly disclose total prices. Hopper agreed to pay $35 million for consumer redress and is prohibited from misrepresenting fees under a proposed order.
$1.5M
The FTC finalized a settlement with Publishing.com LLC and its principals for misleading consumers about potential earnings from self-publishing products. The company will pay $1.5 million and is prohibited from making unsubstantiated earnings claims, failing to disclose refund terms, and misrepresenting endorsements and reviews.
The FTC is seeking public comment on a proposed policy statement addressing concerns that AI companies may be manipulating AI system outputs contrary to consumer expectations for objectivity and accuracy. The statement explains that such conduct could be considered deceptive under Section 5 of the FTC Act. The public comment period runs until July 31, 2026.