Facebook (FB) Compromised Users’ Security and Privacy: FTC Report

Facebook Inc. (NASDAQ:FB) has been above gaining profits in exchange for user security, according to a new report released by te Federal Trade Commission (FTC). Just days after Google Inc. (NASDAQ:GOOG) was ordered to pay more than $22 million i fines for its security issues involving the Safari browser by Apple Inc. (NASDAQ:AAPL), the FTC wrote a 19-page report criticizing Facebook repeatedly for “false, “misleading” and “deceptive” practices in establishing secure applications for users.

Facebook Inc. (FB)

In the report, Facebook Inc. (NASDAQ:FB) was being investigates for its process of screening and verifying applications submitted by developers. The report found that, from May 2009 to December of that year, 254 applications were submitted for verification, and all of them received a green “verified” tickmark that suggested the application was “verified” trustworthiness – Facebook’s version of a Good Housekeeping Seal of Approval, as it were.

However, the report had found that each of the developers who had submitted these applications paid Facebook Inc. (NASDAQ:FB) $375 a piece ($175 if a student or non-profit organization) to become “verified” – and those applications were given a green “verified” badge without the thorough security tests Facebook professed when it ran its verification program:

“Application Verification Facebook is introducing the Application Verification program which is designed to offer extra assurances to help users identify applications they can trust — applications that are secure, respectful and transparent, and have demonstrated commitment to compliance with Platform policies.”

This sounds right and good, except the FTC found that Facebook Inc. (NASDAQ:FB) used the money received from these developers (about $95,000 in total) and just placed the “verified” badge on them, put them in high-preference location on search and had made no extra effort to verify those appplications compared to “non-verified” applications. From the report:

“Facebook took no steps to verify either the security of a Verified Application’s website or the security the Application provided for the user information it collected, beyond such steps as it may have taken regarding any other Platform Application.”

This basically means that the FTC is accusing Facebook Inc. (NASDAQ:FB) of essentially taking bribes to accept “verified” applications without actually testing the applications for their safety, security and transparency for users – which subsequently would open up users to security and privacy breaches by these third-party applications. As a result of the report’s findings, Facebook has agreed to go through 20 years of audits from an independent watchdog group that monitors Internet security.

While it’s not a $22 million fine like Google Inc. (NASDAQ:GOOG) for its privacy breach, it is still a mark on the reputation of Facebook Inc. (NASDAQ:FB) – such that it is.