FTC Keeps Pressure on Safe-Harbor Enforcement as Agreement with EU Undergoes Review

On May 9, the Federal Trade Commission (“FTC”) announced that American Apparel, Inc. has agreed to settle allegations that the company falsely claimed to comply with safe-harbor privacy rules governing data transfer between the United States and the European Union. The FTC complaint charges that the company, a clothing manufacturer and retailer with more than 200 stores worldwide, falsely claimed on its website that it was a current participant in the U.S.-EU Safe Harbor and U.S.-Swiss Safe Harbor frameworks, when in fact it had allowed its certification to lapse. American Apparel is charged under Section 5 of the FTC Act for unfair and deceptive practices by misrepresenting its compliance with the frameworks in its privacy policy. The FTC elaborated that “this does not necessarily mean the company committed any substantive violations of the Safe-Harbor Framework’s privacy principles.”