Hundreds of US-based companies handling EU citizens' data have lied about belonging to a data protection arrangement known as the Safe Harbour Framework.

Christopher Connolly, a director at Galexia, an Australian-based consulting company on internet law and privacy, told the European Parliament’s civil liberties committee on Monday (7 October) that “many claims of Safe Harbour membership are false.”

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He said around one out of every seven Safe Harbour claims of membership are bogus.

The Safe Harbour agreement, hammered out in 2000 between the European Commission and the US Department of Commerce, is supposed to ensure that firms follow EU data protection laws when processing the personal data of EU citizens.

Just under 3,000 companies have signed up to the self-certification scheme, which is only enforceable once the company makes a promise to adhere to a handful of privacy principles.

Companies are also entitled to limit the scope to cover only human resource data, or consumer data, or just offline data.

Galaxia research found over 200 false claims in 2008. This had increased to 427 in September 2013.

“In those 427 organisations, you will find large household names in Europe, with hundreds of millions of customers,” Connolly said.

He added that some of the companies place unauthorised Safe Harbour seals and logos on their website without ever having signed up to the framework in the first place.

The unauthorised visual symbols often have the word ‘EU’ or the European flag on the seal.

“These are simply very low quality and false representations of the actual membership of the Safe Harbour,” Connolly noted.

Over 10 percent of companies that make a false claim of Safe Harbour membership display the US department of commerce Safe Harbour logo on their website.

Privacy advocates have for years asked the Federal Trade Commission (FTC), which enforces Safe Harbour, to address the false claims but with little success.

The FTC has filed six cases of false claims against minor companies and did not sanction any of them.

Around 30 percent of all companies do not provide any information on dispute resolution options, contrary to the Safe Harbour rules. Others who display resolution options point to agencies that charge thousands of dollars to file a complaint.

Over 460 members cite the American Arbitration Association as their dispute resolution provider, which charges the person filing the complaint between $120 and $1,200 per hour with a four-hour minimum charge plus a $950 administration fee.

Meanwhile, Safe Harbour has no provisions to stop NSA-type activities from snooping on EU citizens.

Financial records, data records, travel records, and data and voice carried by US telecommunications providers are excluded from Safe Harbour jurisdiction.

“It would be dangerous to rely on Safe Harbour to manage any aspect of the specific national security issue we face now without first addressing the broader issue of false claims and non-compliance,” Connolly said.

The European Commission, for its part, said it is possible the agreement contains loopholes.

It noted, a few weeks after former NSA agent turned whistleblower Edward Snowden leaked secret documents to the Washington Post and the Guardian, that US data protection standards are lower than in the EU.

"The Safe Harbour agreement may not be so safe after all,” said EU commissioner for Justice Viviane Reding in July.

The commission is set to come out with an assessment report on Safe Harbour before the end of the year.

The FTC, for its part, says the agreement ensures the safe transfer of data of EU citizens.

“We think it is a great way for us to protect European citizens when we are doing a case involving a US company,” FTC commissioner Julie Brill told reports in Brussels in March.

EU privacy bill - one-stop shop

For her part, Reding also on Monday in Luxembourg said "an overwhelming majority" of EU justice ministers gave her "a very strong political endorsement" on a separate EU data privacy bill.

Under the draft law, EU citizens who want to complain about data-mishandling by internet firms, such as Facebook or Google, which have their EU seats in Ireland, can appeal to their national data chiefs instead of trying to reach the more remote Irish authorities.

On the other side, companies can tackle EU-wide data cases through the data chief in the EU country in which they have their HQ, instead of dealing with 28 different EU authorities.

Reding said her officials will draft a final version of the bill in December, with a view to adoption before EU elections in May 2014.