The Federal Trade Commission has approved a settlement that forces Sears Holdings Management Corp. to destroy data it collected from online users.

Users downloaded Sears' tracking software, which monitors web activity, between April 2007 and January 2008. Each was paid $10.

The program involved sending pop-up advertisements to 15 out of every 100 visitors, requesting email addresses. Via email, respondents were invited to download the online browsing tracking software and were promised $10 if they kept it for a minimum of one month.

One of the FTC's reasons for finalizing the settlement was its observation that Sears did not reveal it would "monitor nearly all of the Internet behavior that occurs on consumers' computers."

In addition to deleting all the data collected from this coup, Sears will also have to "clearly and prominently" notify people about the presence of tracking applications in the future.

According to Sears, downloaders "were informed upfront of the nature of the work being conducted and were paid for their participation." But as a result of this settlement it has committed not to conduct similar projects again.

"This decision is sending the message that the FTC is going to keep online business on their toes," concluded privacy lawyer Alan Charles Raul of Sidley Austin (via MediaPost). "I think they're saying to online businesses: 'You better err on the side of more disclosure than you previously thought.'"

This month, the FTC urged the Federal Communications Commission to make considerations for behavioral targeting in its pending broadband plan.