Vol. 8:1] Susan E. Gindin
Sears was not fined by the FTC for its Tracking Application, the consequences of the
enforcement action are considerable. Under the Decision and Order,
21
Sears has
substantial reporting obligations to the FTC for four years, and is subject to steep fines if
it violates the Decision and Order during the next twenty years. Fines can be
considerable in enforcement actions.
22
¶13 Sixth, to some extent, the Sears Matter reflects a shift from the position that the
consumer is legally responsible for his actions (and in fact has a duty to read legal
documents
Furthermore, even without a fine, dealing with an
FTC enforcement action is very expensive, both in terms of legal expenses, and in time
spent responding to FTC allegations.
23
) to a more protective position. As discussed in this Article, studies show
that the online consumer is impulsive and unlikely to consider the legal consequences of
his or her online behavior.
24
Although there are likely many reasons why consumers are
so “click-happy” online, free and instantaneous availability of many online resources
probably contributes to this impulsiveness.
25
At the same time, the risk of blindly
accepting online privacy notices has intensified because digital technologies enable
companies to invisibly track consumers and amass huge amounts of consumer data
without their knowledge. Therefore, the FTC has signaled its commitment to increase its
consumer protection efforts particularly in the behavioral tracking realm.
26
¶14 Seventh, from a consumer standpoint, the action is an important lesson for
consumers that their inattention to the “fine print” may sometimes have serious
unforeseen consequences. Sears’ advertising suggested consumers would be joining an
“online community” when in fact the Tracking Application effectively gave Sears the
means to monitor personal data including bank accounts and prescription drug
information. Similarly, people have inadvertently downloaded adware
27
along with free
screensavers, games, and other utilities.
28
21
Decision and Order, Sears Holdings Mgmt. Corp., File No. 082 3099 (Fed. Trade Comm’n June 4,
2009), http://www.ftc.gov/os/caselist/0823099/index.shtm.
22
For example, Zango agreed to settle its action with the FTC for $3 million. Zango, Inc., File No. 052
3130 (Fed. Trade Comm’n Nov. 3, 2006), http://www.ftc.gov/os/caselist/0523130/index.shtm.
23
See Robert A. Hillman & Jeffrey J. Rachlinski, Standard-Form Contracting in the Electronic Age, 77
N.Y.U.
L. REV. 429, 432 (2002) (asserting that although e-commerce changes some of the dynamics of
standard-form contracting in interesting and novel ways and presents some new challenges, these
differences do not call for the development of a radically different legal regime); see also Kaustuv M. Das,
Comment, Forum-Selection Clauses in Consumer Clickwrap and Browsewrap Agreements and the
“Reasonably Communicated” Test, 77 W
ASH. L. REV. 481 (2002).
24
See infra Part V, for a discussion of studies showing that consumers uniformly do not pay attention to
disclosures.
25
See generally Hillman & Rachlinski, supra note 23 (suggesting many additional reasons why
consumers do not pay attention to contracts, such as trust in the vendor).
26
See Stephanie Clifford, Fresh Views at Agency Overseeing Online Ads, N.Y. TIMES, Aug. 4, 2009, at
B1, available at http://www.nytimes.com/2009/08/05/business/media/05ftc.html; Douglas MacMillan, The
FTC Takes On Targeted Web Ads, B
USINESSWEEK, Aug. 2, 2009,
http://www.businessweek.com/technology/content/aug2009/tc2009082_486167.htm.
27
Wikipedia describes adware as “any software package which automatically plays, displays, or
downloads advertisements to a computer after the software is installed on it or while the application is
being used.” Wikipedia, Adware, http://en.wikipedia.org/wiki/Adware (last visited Aug. 6, 2009).
Still others have unwittingly duped their
28
See, e.g., Press Release, Fed. Trade Comm’n, DirectRevenue LLC Settles FTC Charges, Will Give Up
$1.5 Million in Ill-Gotten Gains for Unfair and Deceptive Adware Downloads (Feb. 16, 2007), available at
http://www.ftc.gov/opa/2007/02/directrevenue.shtm (describing how DirectRevenue and its affiliates
offered consumers free content and software, such as screensavers, games, and utilities, without disclosing
adequately that downloading them would result in installation of adware which monitored consumers’