Feds say Twitter used contact info collected for security purposes to target ads

Musk would have been appointed to Twitter’s board on Saturday, but the world’s richest man informed the company on the day that he would not, in fact, be taking the board seat.

The Department of Justice and Federal Trade Commission announced on Wednesday that they had reached a $150 million settlement with the company.

The settlement would resolve claims from the government that the company did not adequately inform its users about how their contact information would be used to target ads rather than just secure their accounts, in violation of the FTC Act.

The settlement announcement was accompanied by a lawsuit accusing the company of misrepresenting the security and privacy protections of its users.

The agencies alleged that the social networking site collected phone numbers and email addresses to help advertisers target their messages, but didn't tell users. They accused the company of lying about complying with international privacy shield frameworks that ban companies from processing user data for purposes they have not authorized.

The FTC said in a statement that the alleged violations impacted more than 140 million users.

As part of the settlement, the company will have to create a comprehensive privacy program, conduct a privacy review, and regularly test its data privacy protections. It will need to submit to regular independent assessments of its data privacy program. The DOJ and FTC will be in charge of making sure that the settlement terms are followed.

The $150 million penalty reflects the seriousness of the allegations, and the substantial new compliance measures to be imposed as a result of today's proposed settlement will help prevent further misleading tactics.

About 3% of the company's revenue will come from the $150 million fine.

The latest attempt by the U.S. to apply consumer protection law to data privacy violations is the settlement. The FTC settled a privacy claim against Facebook for $5 billion. Critics argued that it was still not enough, given that 9% of the company's revenue was from risk-taking, and that it was a slap on the wrist that would encourage tech companies to take such risks again.

A request for comment was not immediately responded to.

You can subscribe to CNBC on the internet.

The U.S. government is questioning your online privacy.