(Updates with FTC comments in third paragraph.)
May 8 (Bloomberg) -- Snapchat Inc. settled claims by the U.S. Federal Trade Commission that it deceived users by falsely promising its photo messages disappeared, 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 easy workarounds that Snapchat failed to address or let users know about, the FTC said today.
“If there’s one message we want to make sure is clear today, it is that if you make promises about privacy you must honor those promises. Otherwise you risk FTC enforcement action,” said Christopher Olsen, an assistant director in the FTC’s division of privacy and identity protection.
The FTC case adds to Snapchat’s growing pains. Snapchat is dealing with the snafus that sometimes afflict young and fast- growing technology companies, including having to apologize for a breach that caused data such as users’ phone numbers to be exposed.
The company has quickly accumulated a large user base and attracted the attention of Internet giants including Facebook Inc., which last year offered to buy Snapchat for about $3 billion. Snapchat has been staffing up and recently hired a Google Inc. executive as its director of information security.
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 didn’t pay a fine to resolve the FTC’s complaint. If it violates the consent order going forward, the company can be fined up to $16,000 per violation per day, agency spokesman Jay Mayfield said.
Olsen told reporters on a conference call that users were attracted to use Snapchat because of its privacy promises.
“This user base is very interested in privacy, and it turns out that the claims the company were making were misrepresentations,” he said.
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 Inc.
--With assistance from Chris Strohm in Washington.