15 worst Internet privacy scandals of all time

This list in honor of National Data Privacy Day on Jan. 28 involves technologies from search to social media, email to voice mail, mobile phones to Webcams

In honor of National Data Privacy Day this Saturday, Jan. 28, we've put together a list of the 15 worst Internet privacy scandals of all time.

These high-profile privacy scandals involve many underlying technologies, from search to social media, email to voice mail, mobile phones to Webcams to GPS. But at the heart of all of these privacy scandals are companies collecting personal data without the user's knowledge or consent and then either sharing it with third parties or simply failing to keep it safe.

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The latest company to come under the privacy microscope is Google, which revealed a new privacy policy on Tuesday that clarified how it is combining user data across its services.

Meanwhile, on Wednesday the European Union unveiled stiffer penalties and higher fines for U.S. firms that fail to meet their privacy rules for cloud computing and social media applications.

With online privacy expected to remain a high-profile issue in 2012, here's our list of the biggest online privacy breaches of all time:

1. Sony CD spyware

Sony BMG ran into a major privacy flap in fall 2005 because of the anti-piracy measures called XCP that it added to music CDs. When a customer played one of these CDs on a Windows PC, the CD installed hidden rootkit software onto the PC that communicated the CD being played and the IP address of the PC back to Sony. This so-called spyware also created vulnerabilities on PCs for worms or viruses to exploit. Critics said Sony had created a backdoor onto its customers' machines, leading Sony to recall the CDs and offer a free removal tool for the rootkit software. Class action lawsuits were filed against Sony in Texas, New York and California. The U.S. Federal Trade Commission required Sony to pay $150 to any consumer whose PC was damaged by the software as part of a settlement for violating federal law. (Also see: Sony BMG rootkit scandal - five years later)

2. The Craigslist experiment

In February 2006, Seattle Web developer Jason Fortuny posed as a woman seeking sex on Craigslist to see how many responses he would get in 24 hours. He received 178 responses, including photos, names, email addresses and telephone numbers of the men who answered the ad. Fortuny then published all of these responses on a website called Encyclopedia Dramatica. The incident received a significant amount of mainstream media coverage, including the Associated Press and MSNBC. Fortuny was later sued in Illinois court by an anonymous plaintiff, and in May 2009 Fortuny ended up receiving a $75,000 default judgment.

3. AOL Search leak

In August 2006, AOL released a file containing 20 million search keywords used by 650,000 of its users over a three-month period. The file was supposed to be anonymous data available for research purposes, but personally identifiable information was available in many of the searches making it possible to identify an individual and their search history. AOL admitted it was a mistake to release the data and removed it from its website after three days, but by then the data had been mirrored at sites across the Internet. AOL's CTO Maureen Govern quit two weeks later. In September 2006, a class action lawsuit was filed - that's still lingering in California courts -- against AOL demanding $5,000 per user.

4. Google Street View

In May 2007, Google added its Street View feature to Google Maps, and it has been battling privacy complaints, paying fines and facing audits ever since. Google Street View provides panoramic views of streets gathered by webcams. It prompted privacy worries for showing men leaving strip clubs, people entering adult bookstores, and people picking up prostitutes, among other activities. Google allows users to flag worrisome images for removal and added a blurring feature for faces and license plates. Nonetheless, Street Views has run into privacy battles with Switzerland, France, Belgium, Germany and South Korea, to name a few countries. France fined Google the equivalent of $142,000 in March 2011 related to Street Views, but an August 2011 review by the U.K. government gave Google positive marks for improving the privacy of Street View. Meanwhile, Google must undergo regular privacy audits mandated by the FTC for the next 20 years as the result of a settlement over improper privacy disclosures in its now-defunct Buzz social media service.

5. Hotmail hot mess

One of the biggest privacy scandals in terms of scale involved Microsoft's Hotmail free email service. In October 2009, Microsoft urged hundreds of millions of its Hotmail users to change their passwords due to a privacy breach. Microsoft said it discovered that users' details from 10,000 email accounts were posted on the www.pastebin.com website as the result of a likely phishing scheme. Microsoft urged users of email accounts ending in @hotmail.com, @msn.com and @live.com to begin changing their passwords every 90 days.

6. Webcamgate

A Pennsylvania school district that used built-in Webcams to monitor the use of several thousand Apple laptops that it provided to students for their use at home ran afoul of online privacy issues and was forced to pay up. The school district admitted it had over 56,000 photos and screen grabs gathered by the Webcams and security software installed on the laptops. These photos were taken without the knowledge or consent of the students, including in their bedrooms and in various stages of undress. In April 2010, high school sophomore Blake Robbins filed a class action lawsuit against the Lower Merion School District for invasion of privacy. In October 2010, the school district agreed to pay $610,000 to settle two lawsuits related to the incident.

7. Facebook apps

The popular social media site has been plagued by privacy issues over the years. Its highest-profile problem was in October 2010, when Facebook admitted that its top 10 most popular applications including FarmVille and Texas Hold`em shared user data, including names and friends' names, with advertisers. A Wall Street Journal investigation uncovered the Facebook privacy breach and said it affected tens of millions of users, including some that had used Facebook's most stringent privacy settings. Facebook had previously been in trouble for transmitting user ID numbers to advertising companies when users clicked on ads. In November 2011, Facebook settled a case with the U.S. Federal Trade Commission about several incidents and agreed to 20 years of third-party privacy audits (Also see: 10 must-know Facebook privacy/security settings.)

8. Patient data exposed

In March 2011, California-based insurer HealthNet announced a privacy breach for nearly 2 million of its customers, exposing their names, addresses, Social Security numbers, health and financial data. The data were unencrypted and stored on hard drives that have gone missing from contractor IBM's data center. A nationwide class action suit was filed against HealthNet and IBM as a result of this incident. It was HealthNet's second big data breach in two years, having lost the Social Security numbers of 1.5 million policyholders stored on a hard drive in 2009. HealthNet isn't the only healthcare provider to lose private medical data or inadvertently post it online. The U.S. Department of Health and Human Services says personal medical data for more than 11 million people have been exposed online in the last two years.

9. Behavior targeting is targeted

A new area of concern for privacy advocates is behavioral targeting by online advertising services. These services create behavioral profiles based on anonymous data of how computer users surf the web and then serve up targeted ads based on these profiles. The FTC ruled in 2009 that these services must provide consumers with notice about the collecting of behavioral data and provide them with the ability to opt out. In March 2011, the FTC reached its first behavioral profiling settlement with advertising network Chitika for deceptive opt-out practices. Chitika said it mistakenly programmed the opt-out setting for 10 days, instead of the intended 10 years.

10. iPhone tracking

Apple received so much criticism about how its iPhones and iPads were collecting and storing user location data that then-CEO Steve Jobs made a rare apology in April 2011. Jobs conceded Apple's mistakes in dealing with the location data after security researchers discovered an unencrypted file inside the devices contained a cache of locations visited over the last 12 months. Jobs emphasized that Apple was not tracking its customers: "Never have. Never will," he said, in response to the criticism from Congress and others. Apple provided a free software update to users to fix the glitch. But that wasn't the last time that location data gathered by mobile devices from Wi-Fi hotspots has come under fire. Google and Microsoft later admitted that they store the same kind of user location data on their mobile operating systems, too. (Read "Rating apologies.")

11. PlayStation network hacked

Also in April 2011, Sony announced that hackers had stolen personal data from 77 million PlayStation subscribers. Although this was a security breach of Sony's PlayStation Network, the privacy implications were significant given that the intruder had stolen names, addresses, email addresses and birthdates for so many customers. Sony said it was unclear whether credit card data was stolen, and it warned customers to be on the lookout for identity theft. Security experts said the Sony privacy breach was one of the largest on record. Sony estimated that the incident cost the company $171 million to rebuild its computers and purchase credit protection services for its customers.

12. Disney violates kid data rule

U.S. websites that target children for subscriptions or sales must comply with special rules aimed at gathering permission from parents under the Children's Online Privacy Protection Act (COPPA). In May, 2011, Disney's Playdom, Inc. had the dubious honor of paying the largest-ever COPPA fine, which was a $3 million civil penalty from the FTC for gathering and sharing personal information about hundreds of thousands of children without parental consent. Playdom, which runs the popular Pony Stars site, collected kids' ages and email addresses and allowed them to post their full names and locations. Other sites that have run afoul of COPPA rules include blogging outlet Xanga.com and mobile app developer Broken Thumbs.

13. Carrier IQ

The year 2011 closed out with another privacy-oriented brouhaha, this time surrounding Carrier IQ, which sells analytics software for mobile devices. The software is used in an estimated 142 million smartphones. A systems analyst/amateur security researcher discovered this software on his smartphone, and found that it was capturing battery life, connections, text messages, emails and other actions. A slew of accusations followed, with Carrier IQ and its carrier customers being taken to task for allegedly keylogging, spying and tracking. But more detailed analysis by other professional security researchers found that the systems analyst who originally raised the issue was confusing Carrier IQ's actions with those of debug statements mistakenly left in the Android code by phone maker HTC's programmers. As it turns out, Carrier IQ was simply collecting performance data for optimizing the end users' experience. Nevertheless, the original discovery prompted Sprint and HTC to reportedly no longer include the Carrier IQ software on their devices.

14. GM to sell vehicle data

General Motors has run into privacy issues with its OnStar GPS-based system, which may continue to track vehicles even after a customer cancels the service. General Motors changed its OnStar privacy policy in December 2011, indicating that it reserves the right to share data it has collected -- such as a vehicle's speed, location, odometer reading, seat belt usage, and airbag deployment -- with other companies. This is true even for customers who have cancelled the OnStar service unless they explicitly ask for the two-way communications link to be disabled. General Motors says the data would be anonymous and aggregated before being sold. Vehicle-based telematics systems like OnStar are an emerging area for privacy concerns, with new worries about the possibility of misuse of data.

15. Voicemail hacking

One of the biggest stories of 2011 was the shuttering of News Corps' weekly U.K. publication, News of the World, as the result of widespread hacking of the mobile voicemail accounts of politicians, celebrities, and crime victims in the pursuit of stories by the tabloid publication. Investigations of this illegal behavior are ongoing, but have already led to several high-profile arrests and resignations of News Corps executives. Reporters apparently hacked into the voicemail accounts by using the default PINs that shipped with the phones.

(Thanks to the Center for Democracy and Technology, the Electronic Frontier Foundation and the online privacy service provider TRUSTe for helping with this article.)

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This story, "15 worst Internet privacy scandals of all time" was originally published by NetworkWorld.

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