FTC requires Sony to respect their customers. Sorta.


Once a giant, a seemingly unstoppable force of high quality, well-thought technology, seems today to be floundering under it’s own weight and cluelessness. I’d believe it in a second if you told me that the product design team hasn’t been outside their building in a decade, and has only learned about consumers through marketing reports.

The PSP content pricing foolishness, the multitude of idiotic propreitary formats, foolish technology directions that are outdated before they launch…I swear Sony tries to fail.

And do you remember the rootkit debacle of ’05? If you don’t remember this story, here’s the quick recap:

Sony knowingly and secretly installed spyware on user’s computers.

Class action lawsuits were filed, and the FTC literally made a federal case out of it. This week it was announced that Sony settled with th FTC. The punishment? Sony is now required to do …well… nothing, really. To call this a slap on the wrist is to drastically overestimate the effect of wrist slapping. Here’s the quick rundown:

  • Leave the rootkit uninstaller on their Web for two years (something they’d have done anyway… it’s easier to leave it than to remember to take it off later)
  • Reimburse users (with full receipts and documentation) up to $150 to cover costs associated with damages incurred via the rootkit.
  • Consumer exchange (something that has already been happening)
  • "to provide financial inducements to retailers to return the CDs that create security problems for consumers’ computers. For CDs already in its stock that are sold to retailers, Sony BMG is required to disclose on the product packaging the restrictions on use and the security vulnerabilities."
  • "…record-keeping and reporting provisions designed to allow the agency to monitor compliance with its order."

There are some fairly solid  restrictions laid out by the FTC, but only towards Sony. But what about the rest of the business world?

The settlement requires clear and prominent disclosure on the packaging of Sony BMG’s future CDs of any limits on copying or restrictions on the use of playback devices. It bars the company from installing content protection software without obtaining consumers’ authorization, and, if Sony BMG conditions consumers’ use of its CDs on installation of the content protection software, it must disclose that requirement on the product packaging.

In addition, the settlement bars Sony BMG from using the information on consumers’ listening preferences that it has already gathered through the monitoring technology it installed and bars them from using the information to deliver ads to those consumers. For future CDs containing such technology, the agreement requires that, before transmitting information about consumers, their computers or their use of the CD, Sony BMG must clearly disclose on consumers’ computer screens what the technology will do, and obtain consumers’ consent. If it conditions consumers’ use of its CDs on their agreement to have information collected, Sony BMG must disclose that condition clearly on the CDs’ packaging.

As I understand it, this settlement doesn’t constitute "case law", which means that once again the FTC is a day late and $150/user late.

The FTC has essentially required Sony to respect their customers. Well, at least in certain ways. Has the FTC kept consumers safer? Nope. Take the mandate from the Bureau of Consumer Protection (a wing of the FTC) is to "protect consumers against unfair, deceptive or fraudulent practices". How does this settlement do any of those things?

It doesn’t. It sends a clear message to big business: "You can do anything you want, and if you’re caught, and if we feel like coming after you, we’ll scold you like a young child, give you a minor wrist slap, then you’ll deal with the rest of the fallout through your own public relations. Good luck!"

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