The FTC has sent five tax preparation companies a Notice of Penalty Offenses, warning them regarding the use of consumer data.

Tax prep companies have access to a tremendous amount of personal and sensitive consumer data. The FTC is warning five companies that they could face “penalties up to $50,120 per violation if they misuse personal data in ways that run counter to the original purpose for which this information was collected.”

The notices sent to the tax preparation companies detail the acts and practices that were found to be a violation of the FTC Act in a previous administrative case against Beneficial Corp. In that case, the FTC found that the company engaged in unfair and deceptive practices in violation of the FTC Act by using information collected for tax preparation services for unrelated loan solicitation purposes and ordered the company to halt such practices.

In particular, the five companies have been warned that the following actions are deceptive or unfair without express consent from consumers:

• using information collected in a context where an individual reasonably expects that such information will remain confidential for purposes not explicitly requested by the individual;
• using such information to obtain a financial benefit that is separate from the benefit generated from providing the product or service requested by the individual; and
• using such information to advertise, sell, or promote products or services.

“Consumers trust tax preparers with sensitive information about their finances, marital status, children, and health,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Companies that violate American’s privacy by seeking to monetize personal data without consent can face significant financial consequences.”

The FTC does not list which five companies it sent the notices to, but a copy of the notice can be viewed here.