Notice of Penalty Offenses Concerning Misuse of Information Collected in Confidential 

Contexts

The Federal Trade Commission has determined that the following practices related to the 

misuse of information are deceptive or unfair and are unlawful under Section 5(a)(1) of the 

Federal Trade Commission Act. 

1. It is an unfair or deceptive trade practice to use information collected in a context where 

an individual reasonably expects that such information will remain confidential 

(“Confidential Context”)1 for any purpose not explicitly requested by the individual

unless the individual first provides affirmative express consent for such use.

2 For 

example:

a. It is an unfair or deceptive trade practice to use information collected in a 

Confidential Context to obtain a financial benefit that is separate from the benefit 

generated from providing the product or service requested by the individual unless the 

individual first provides affirmative express consent for such use.

3

b. It is an unfair or deceptive trade practice to use information collected in a 

Confidential Context to advertise, sell, or promote products or services unless the 

individual first provides affirmative express consent for such use.

4

2. It is an unfair or deceptive trade practice to make false, misleading, or deceptive 

representations or omissions concerning the use or confidentiality of information 

1 Expectations of confidentiality are context specific. In re: Beneficial Corp., 86 F.T.C. 119, 172 

(1975) (finding a “basic ethical consideration which by its nature is equally applicable to anyone 

in a position to abuse the confidence of a client”), aff’d in relevant part, 542 F.2d 611 (3rd Cir. 

1976).

2 Id. at 173, 175-77 (“Because the fault we have found lies in the undisclosed use of confidential 

data, the law judge was correct in entering an order provision requiring full disclosure and 

consent before loan solicitation may begin. Under the order, Beneficial may not use any 

information given by a tax customer unless the customer has signed a consent form detailing,

inter alia, the specific purpose for the consent, the exact information to be used, and the 

particular use intended. The lack of just this information is what makes the present [consent] 

form inadequate.”).

3 Id. at 173 (noting that “the confidential relationship is breached whenever the customer’s 

information is used for the financial gain of the [business] . . . [w]hether or not [the business] 

brokered confidential information to other businesses, or simply capitalized on it 

themselves...”).

4 Id. at 173, 177 (determining that using customers’ tax information to market loans was an 

unfair practice, but permitting the use of names and contact information of individuals for the 

purpose of communication with such customers solely concerning the particular service 

requested by the individual).
collected in a Confidential Context.

5 For example, it is an unfair or deceptive trade 

practice to misrepresent, explicitly or by implication, that an individual’s information 

will: (i) be used solely to provide the specific product or service requested by the 

individual and not for any unanticipated uses; and (ii) not be used to obtain a financial

benefit that is separate from the benefit generated from providing the product or service 

requested by the individual.

6

5 Id. at 173-77 (determining that it is a deceptive practice to “convert[] tax data for [a business’s] 

own profit” and fail to “guard tax information from unauthorized use” where a consumer expects 

such information to remain private).

6 Id. at 173-174 (adding that “[s]ince Beneficial’s tax advertising was designed to attract 

customers with an alluring offer and the tax service was designed to switch the customers 

unwittingly to Beneficial’s regular loan service, we find as an additional ground of deception that 

the loan solicitation practices were part of a pattern of conduct akin to bait and switch”).