FTC Fines Mental Health Startup Cerebral $7 Million for Major Privacy Violations – The Hacker News

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Apr 16, 2024NewsroomPrivacy Breach / Regulatory Compliance

Major Privacy Violations

The U.S. Federal Trade Commission (FTC) has ordered the mental telehealth company Cerebral from using or disclosing personal data for advertising purposes.

It has also been fined more than $7 million over charges that it revealed users’ sensitive personal health information and other data to third parties for advertising purposes and failed to honor its easy cancellation policies.

“Cerebral and its former CEO, Kyle Robertson, repeatedly broke their privacy promises to consumers and misled them about the company’s cancellation policies,” the FTC said in a press statement.

While claiming to offer “safe, secure, and discreet” services in order to get consumers to sign up and provide their data, the company, FTC alleged, did not clearly disclose that the information would be shared with third-parties for advertising.

The agency also accused the company of burying its data sharing practices in dense privacy policies, with the company engaging in deceptive practices by claiming that it would not share users’ data without their consent.

Cybersecurity

The company is said to have provided the sensitive information of nearly 3.2 million consumers to third parties such as LinkedIn, Snapchat, and TikTok by integrating tracking tools within its websites and apps that are designed to provide advertising and data analytics functions.

The information included names; medical and prescription histories; home and email addresses; phone numbers; birthdates; demographic information; IP addresses; pharmacy and health insurance information; and other health information.

The FTC complaint further accused Cerebral of failing to enforce adequate security guardrails by allowing former employees to access users’ medical records from May to December 2021, using insecure access methods that exposed patient information, and not restricting access to consumer data to only those employees who needed it.

“Cerebral sent out promotional postcards, which were not in envelopes, to over 6,000 patients that included their names and language that appeared to reveal their diagnosis and treatment to anyone who saw the postcards,” the FTC said.

Pursuant to the proposed order, which is pending approval from a federal court, the company has been barred from using or disclosing consumers’ personal and health information to third-parties for marketing, and has been ordered to implement a comprehensive privacy and data security program.

Cerebral has also been asked to post a notice on its website alerting users of the FTC order, as well as adopt a data retention schedule and delete most consumer data not used for treatment, payment, or health care operations unless they have consented to it. It’s also required to provide a mechanism for users to get their data deleted.

The development comes days after alcohol addiction treatment firm Monument was prohibited by the FTC from disclosing health information to third-party platforms such as Google and Meta for advertising without users’ permission between 2020 and 2022 despite claiming such data would be “100% confidential.”

The New York-based company has been ordered to notify users about the disclosure of their health information to third parties and ensure that all the shared data has been deleted.

Cybersecurity

“Monument failed to ensure it was complying with its promises and in fact disclosed users’ health information to third-party advertising platforms, including highly sensitive data that revealed that its customers were receiving help to recover from their addiction to alcohol,” FTC said.

Over the past year, FTC has announced similar enforcement actions against healthcare service providers like BetterHelp, GoodRx, and Premom for sharing users’ data with third-party analytics and social media firms without their consent.

It also warned [PDF] Amazon against using patient data for marketing purposes after it finalized a $3.9 billion acquisition of membership-based primary care practice One Medical.

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