Twitter will pay $150 million to resolve a joint lawsuit from the Department of Justice and Federal Trade Commission accusing it of illegally giving advertisers access to users’ contact information for targeted advertising.
“From at least May 2013 until at least September 2019, Twitter misrepresented to users of its online communication service the extent to which it maintained and protected the security and privacy of their nonpublic contact information,” reads the complaint. “Specifically, while Twitter represented to users that it collected their telephone numbers and email addresses to secure their accounts, Twitter failed to disclose that it also used user contact information to aid advertisers in reaching their preferred audiences.”
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Twitter asks users to give their phone numbers and email addresses to protect their accounts. The company, however, illegally profited from the practice by allowing advertisers to use the data to target specific users in violation of a 2011 FTC order prohibiting Twitter from misrepresenting its security and privacy practices, the lawsuit alleged.
Under the settlement, which was filed the same day as the complaint in California federal court, Twitter will be banned from further profiting from the collected data. It will also be required to undertake measures aimed at improving the protection of consumer data, including a requirement to implement a “comprehensive privacy and information security program with extensive procedures to safeguard user information and assess internal and external data privacy risks.” The program is not detailed in the proposed deal.
Twitter primarily allows companies to advertise through “promoted products,” which can take the form of promoted tweets, promoted accounts and promoted trends. It offers various services that advertisers can use to reach their targeted audience, including “tailored audiences” and “partner audiences.” The former allow advertisers to target specific groups of users by matching the telephone numbers and email addresses that it collects to the advertisers’ existing list of the same type of information, while the latter allows advertisers to import marketing lists from data brokers to match against the contact information collected by Twitter.
According to the complaint, Twitter used the personal information gathered for the purpose of authenticating accounts to serve targeted advertising and “further its own business interests through its Tailored Audiences and Partner Audiences services.”
After an FTC investigation, Twitter in 2011 settled similar allegations that it had misrepresented the extent to which Twitter protected the privacy and security consumer information. It prohibited the company from further deceiving users about the extent to which it keeps the data private.
It’s unknown whether Elon Musk, who waived standard due-diligence rights when he proposed buying Twitter, knew about the lawsuit from federal law enforcement officials. In a disclosure filed on Tuesday, he notified the Securities and Exchange Commission that he will let his margin loans for the Twitter deal expire and will commit to financing up to $33.5 billion with equity.
Tesla stock has dropped by roughly 45 percent since Musk initially disclosed his stake in Twitter.
Twitter didn’t immediately respond to a request for comment.