Snapchat Settles Claims With FTC That Messages Don't Disappear

Key Product Attribute Didn't Work as Marketed

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Snapchat settled with the Federal Trade Commission over claims that its photo messages don't always disappear, in the latest hiccup for the fast-growing startup.

While the Los Angeles-based company has publicized and marketed how the annotated photos that its users send through its mobile application will "disappear forever" after a few seconds, there are several easy workarounds that Snapchat failed to address or let users know about, the FTC said today. Snapchat also wasn't always alerting users when recipients take a screenshot of messages, and failed to a secure a feature called "find friends" that had a flaw that led to a data breach, the FTC said.

"If a company markets privacy and security as key selling points in pitching its service to consumers, it is critical that it keep those promises," FTC Chairwoman Edith Ramirez said in a statement. "Any company that makes misrepresentations to consumers about its privacy and security practices risks FTC action."

The FTC attention is part of the growing pains that Snapchat is experiencing. The company has quickly accumulated a large user base and attracted the attention of Internet giants including Facebook, which last year offered to buy Snapchat for about $3 billion. Snapchat has been staffing up and recently hired a Google executive as its director of information security.

A wide swath of marketers have experimented with Snapchat, from McDonald's and Taco Bell to Juicy Couture and Wet Seal to HBO's "Girls" and the New Orleans Saints. Overall, their efforts have focused on posting "stories," which are the closest thing Snapchat has to a broadcasting option, since users can make them public. They appear beside account handles in a user's list of friends and can be replayed as often as someone likes in that window. A smaller number of brands have engaged in one-to-one private messaging on the app, which can be tedious because Snapchat hasn't built any publishing tools that would enable sending out messages in bulk. Another peril of that practice is that the brand messages could be seen as spam.

"While we were focused on building, some things didn't get the attention they could have," the company said in a blog post today about the FTC settlement. "Even before today's consent decree was announced, we had resolved most of those concerns over the past year by improving the wording of our privacy policy, app description, and in-app just-in-time notifications. And we continue to invest heavily in security and countermeasures to prevent abuse."

Under the terms of the settlement, Snapchat is now prohibited from misrepresenting how it handles user information and will have to implement a privacy program that will be monitored by an independent privacy expert for 20 years, the FTC said. Snapchat and the FTC didn't address whether the company paid to settle the claims.

Snapchat doesn't reveal its number of users. It has said people now send more than 700 million ephemeral messages a day, with more than 500 million stories viewed daily. The company last week unveiled an option for users to chat with text, stepping into an increasingly crowded mobile-messaging market that includes Facebook and Rakuten.

--Bloomberg News, with additional reporting by Cotton Delo--

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