80 FR 19663 - TES Franchising, LLC; Analysis of Proposed Consent Order To Aid Public Comment

FEDERAL TRADE COMMISSION

Federal Register Volume 80, Issue 70 (April 13, 2015)

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order--embodied in the consent agreement--that would settle these allegations.

[Federal Register Volume 80, Number 70 (Monday, April 13, 2015)]
[Notices]
[Pages 19663-19665]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-08385]


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FEDERAL TRADE COMMISSION

[File No. 152 3015]


TES Franchising, LLC; Analysis of Proposed Consent Order To Aid 
Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices. The attached Analysis to Aid Public Comment describes both 
the allegations in the draft complaint and the terms of the consent 
order--embodied in the consent agreement--that would settle these 
allegations.

DATES: Comments must be received on or before May 7, 2015.

ADDRESSES: Interested parties may file a comment at https://ftcpublic.commentworks.com/ftc/tesfranchisingconsent online or on 
paper, by following the instructions in the Request for Comment part of 
the SUPPLEMENTARY INFORMATION section below. Write ``TES Franchising, 
LLC, Consent Agreement; File No. 1523015'' on your comment and file 
your comment online at https://ftcpublic.commentworks.com/ftc/tesfranchisingconsent by following the instructions on the web-based 
form. If you prefer to file your comment on paper, write ``TES 
Franchising, LLC, Consent Agreement; File No. 1523015'' on your comment 
and on the envelope, and mail your comment to the following address: 
Federal Trade Commission, Office of the Secretary, 600 Pennsylvania 
Avenue NW., Suite CC-5610 (Annex D), Washington, DC 20580, or deliver 
your comment to the following address: Federal Trade Commission, Office 
of the Secretary, Constitution Center, 400 7th Street SW., 5th Floor, 
Suite 5610 (Annex D), Washington, DC 20024.

FOR FURTHER INFORMATION CONTACT: Jessica Lyon, Bureau of Consumer 
Protection, (202) 326-2344, 600 Pennsylvania Avenue NW., Washington, DC 
20580.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 15 U.S.C. 46(f), and FTC Rule 2.34, 16 CFR 2.34, 
notice is hereby given that the above-captioned consent agreement 
containing consent order to cease and desist, having been filed with 
and accepted, subject to final approval, by the Commission, has been 
placed on the public record for a period of thirty (30) days. The 
following Analysis to Aid Public Comment describes the terms of the 
consent agreement, and the allegations in the complaint. An electronic 
copy of the full text of the consent agreement package can be obtained 
from the FTC Home Page (for April 7, 2015), on the World Wide Web at: 
http://www.ftc.gov/os/actions.shtm.
    You can file a comment online or on paper. For the Commission to 
consider your comment, we must receive it on or before May 7, 2015. 
Write ``TES Franchising, LLC, Consent Agreement; File No. 1523015'' on 
your comment. Your comment--including your name and your state--will be 
placed on the public record of this proceeding, including, to the 
extent practicable, on the public Commission Web site, at http://www.ftc.gov/os/publiccomments.shtm. As a matter of discretion, the 
Commission tries to remove individuals' home contact information from 
comments before placing them on the Commission Web site.
    Because your comment will be made public, you are solely 
responsible for making sure that your comment does not include any 
sensitive personal information, like anyone's Social Security number, 
date of birth, driver's license number or other state identification 
number or foreign country equivalent, passport number, financial 
account number, or credit or debit card number. You are also solely 
responsible for making sure that your comment does not include any 
sensitive health information, like medical records or other 
individually identifiable health information. In addition, do not 
include any ``[t]rade secret or any commercial or financial information 
which . . . is privileged or confidential,'' as discussed in Section 
6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 
4.10(a)(2). In particular, do not include competitively sensitive 
information such as costs, sales statistics, inventories, formulas, 
patterns, devices, manufacturing processes, or customer names.
    If you want the Commission to give your comment confidential 
treatment, you must file it in paper form, with a request for 
confidential treatment, and you have to follow the procedure explained 
in FTC Rule 4.9(c), 16 CFR

[[Page 19664]]

4.9(c).\1\ Your comment will be kept confidential only if the FTC 
General Counsel, in his or her sole discretion, grants your request in 
accordance with the law and the public interest.
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    \1\ In particular, the written request for confidential 
treatment that accompanies the comment must include the factual and 
legal basis for the request, and must identify the specific portions 
of the comment to be withheld from the public record. See FTC Rule 
4.9(c), 16 CFR 4.9(c).
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    Postal mail addressed to the Commission is subject to delay due to 
heightened security screening. As a result, we encourage you to submit 
your comments online. To make sure that the Commission considers your 
online comment, you must file it at https://ftcpublic.commentworks.com/ftc/tesfranchisingconsent by following the instructions on the web-
based form. If this Notice appears at http://www.regulations.gov/#!home, you also may file a comment through that Web site.
    If you file your comment on paper, write ``TES Franchising, LLC, 
Consent Agreement; File No. 1523015'' on your comment and on the 
envelope, and mail your comment to the following address: Federal Trade 
Commission, Office of the Secretary, 600 Pennsylvania Avenue NW., Suite 
CC-5610 (Annex D), Washington, DC 20580, or deliver your comment to the 
following address: Federal Trade Commission, Office of the Secretary, 
Constitution Center, 400 7th Street SW., 5th Floor, Suite 5610 (Annex 
D), Washington, DC 20024. If possible, submit your paper comment to the 
Commission by courier or overnight service.
    Visit the Commission Web site at http://www.ftc.gov to read this 
Notice and the news release describing it. The FTC Act and other laws 
that the Commission administers permit the collection of public 
comments to consider and use in this proceeding as appropriate. The 
Commission will consider all timely and responsive public comments that 
it receives on or before May 7, 2015. You can find more information, 
including routine uses permitted by the Privacy Act, in the 
Commission's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission (``FTC'' or ``Commission'') has 
accepted, subject to final approval, a consent agreement applicable to 
TES Franchising, LLC (``TES'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement and take appropriate action or make final 
the agreement's proposed order.
    This matter concerns alleged false or misleading representations 
that TES made to consumers concerning its participation in the Safe 
Harbor privacy frameworks agreed upon by the U.S. and the European 
Union and the U.S. and Switzerland (collectively, ``Safe Harbor 
Frameworks'') and concerning the handling of consumer disputes relating 
to the Safe Harbor Frameworks. The proposed complaint also alleges that 
TES made false or misleading representations to the effect that it was 
a current licensee of the TRUSTe self-regulatory program.
    The Safe Harbor Frameworks allow U.S. companies to transfer data 
outside the EU and Switzerland consistent with European law. To join 
the Safe Harbor Frameworks, a company must self-certify to the U.S. 
Department of Commerce (``Commerce'') that it complies with a set of 
principles and related requirements that have been deemed by the 
European Commission and Switzerland as providing ``adequate'' privacy 
protection. These principles include notice, choice, onward transfer, 
security, data integrity, access, and enforcement. Among other things, 
the enforcement principle requires companies to provide a readily 
available and affordable independent recourse mechanism to investigate 
and resolve an individual's complaints and disputes. Commerce maintains 
a public Web site, www.export.gov/safeharbor, where it posts the names 
of companies that have self-certified to the Safe Harbor Frameworks. 
The listing of companies indicates whether their self-certification is 
``current'' or ``not current.'' Companies are required to re-certify 
every year in order to retain their status as ``current'' members of 
the Safe Harbor Frameworks.
    TES provides business coaching services to franchisees. According 
to the Commission's complaint, TES has set forth on its Web site, 
www.entrepreneursource.com, privacy policies and statements about its 
practices, including (1) statements related to its participation in the 
Safe Harbor Frameworks and (2) statements indicating that it is a 
licensee of the TRUSTe Privacy Program.
    The Commission's complaint alleges that from March 2013 until 
February 2015 TES falsely represented that it was a ``current'' 
participant in the Safe Harbor Frameworks when, in fact, the company's 
self-certifications had lapsed. The Commission's complaint also alleges 
that during this same time period TES represented that all Safe Harbor-
related disputes would be settled by an ``arbitration administered 
agency'' such as the American Arbitration Association, that hearings 
would take place in Connecticut, and that the costs of arbitration 
would be shared equally by the parties. In fact, the independent 
recourse mechanism authorized under TES's Safe Harbor certification was 
the European data protection authorities, which resolve Safe Harbor-
related disputes at no cost to consumers and do not require in-person 
hearings. The Commission's complaint alleges that these false 
representations are likely to deter EU and Swiss citizens from 
attempting to take advantage of the dispute resolution services offered 
by the company.
    The Commission's complaint further alleges that until February 
2015, TES represented through statements in its online privacy policy 
that it was a current licensee of the TRUSTe Privacy Program, when, in 
fact, it was not a current licensee.
    Part I of the proposed order prohibits TES from making 
misrepresentations about its membership in any privacy or security 
program sponsored by the government or any other self-regulatory or 
standard-setting organization, including, but not limited to, the U.S.-
EU Safe Harbor Framework, the U.S.-Swiss Safe Harbor Framework, and the 
TRUSTe privacy programs. Part II of the proposed order also prohibits 
TES from misrepresenting in any manner, its participation in, or the 
rules, processes, policies, or costs of, any alternative dispute 
resolution process or service, including but not limited to, 
arbitration, mediation, or other independent recourse mechanism.
    Parts III through VII of the proposed order are reporting and 
compliance provisions. Part III requires TES to retain documents 
relating to its compliance with the order for a five-year period. Part 
IV requires dissemination of the order now and in the future to persons 
with responsibilities relating to the subject matter of the order. Part 
V ensures notification to the FTC of changes in corporate status. Part 
VI mandates that TES submit an initial compliance report to the FTC, 
and make available to the FTC subsequent reports. Part VII is a 
provision ``sunsetting'' the order after twenty (20) years, with 
certain exceptions.
    The purpose of this analysis is to facilitate public comment on the

[[Page 19665]]

proposed order. It is not intended to constitute an official 
interpretation of the proposed complaint or order or to modify the 
order's terms in any way.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 2015-08385 Filed 4-10-15; 8:45 am]
 BILLING CODE 4910-13-P