Twitter warned investors on Monday that it could be slapped with an FTC fine of up to $250 million for using personal information provided by users for security purposes to instead target advertising.
In its second-quarter 10-Q financial filing with the Securities and Exchange Commission (SEC), Twitter said it received a draft complaint from the FTC on July 28. The FTC alleged that the company’s actions violated a 2011 agreement requiring it to establish a more robust security program and stop misleading consumers about how it protects their personal information.
“The allegations relate to the Company’s use of phone number and/or email address data provided for safety and security purposes for targeted advertising during periods between 2013 and 2019,” Twitter wrote. “The Company estimates that the range of probable loss in this matter is $150.0 million to $250.0 million and has recorded an accrual of $150.0 million.”
Twitter came clean about its use of user data for ad targeting back in October. At the time, the company said it “unintentionally" used some email addresses and phone numbers for advertising. The information was provided by users for account security purposes, such as setting up two-factor authentication.
Twitter said in the financial filing that the matter “remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”
Impact of recent security breach
The financial filing also gave an update on the potential impact of the site’s recent hacking. Last month, a 17-year-old hacker was allegedly able to gain access to a number of high-profile accounts to promote a cryptocurrency scam. Twitter said in the filing that the breach could hurt its reputation, affect its relationship with advertisers, and hinder its growth.
“This security breach may have harmed the people and accounts affected by it,” the company said in the filing. “It may also impact the market perception of the effectiveness of our security measures, and people may lose trust and confidence in us, decrease the use of our products and services or stop using our products and services in their entirety.”