Twitter To Settle Complaint Alleging It Used User Phone Numbers To Target Ads For $150M

Twitter Inc (NYSE: TWTR) will pay $150 million in civil penalties after the social media platform settled a complaint that alleged that the company used its members’ email addresses and phone numbers to target them with advertisements.

What Happened: The settlement pertains to allegations that Twitter violated the Federal Trade Commission Act and an administrative order issued by the Federal Trade Commission in March 2011.

In addition to the penalty, Twitter has agreed to “implement robust compliance measures” to protect its users’ data privacy, according to a joint statement by the U.S. Department of Justice and the FTC.

“The $150 million penalty reflects the seriousness of the allegations against Twitter, and the substantial new compliance measures to be imposed as a result of today’s proposed settlement will help prevent further misleading tactics that threaten users’ privacy,” said Associate Attorney General Vanita Gupta.

Twitter Chief Privacy Officer Damien Kieran said in a blog post on Thursday that Twitter cooperated with FTC “every step of the way.”

“In reaching this settlement, we have paid a $150M USD penalty, and we have aligned with the agency on operational updates and program enhancements to ensure that people’s personal data remains secure and their privacy protected,” said Kieran.
See Also: How To Buy Twitter (TWTR) Shares

Why It Matters: More than 140 million Twitter users were affected as the company obtained data on the pretext of security purposes but instead used the information to target users with ads, said FTC Chair Lina M. Khan. The practice was allegedly carried on between May 2013 to September 2019. 

The complaint alleged that Twitter falsely claimed to comply with the European Union-U.S. and Swiss-U.S. Privacy Shield Frameworks, both of which prohibit companies from processing information in ways not compatible with the purpose authorized by users.

Notably, Twitter's rival Facebook, owned by Meta Platforms Inc (NASDAQ: FB), settled similar privacy violation allegations with the FTC for nearly $5 billion in 2019. At the time, that was a record amount for the federal agency. 

Price Action: On Wednesday, Twitter shares rose 5.8% to $39.25 in the after-hours trading on Wednesday after closing 3.75% higher at $37.10 in the regular session, according to data from Benzinga Pro.

Read Next: Elon Musk Says Twitter Refusing To Cough Up Spam Numbers: They're Being 'Very Suspicious'