The Washington-based Federal Trade Commission (FTC) said an independent investigation has found "several gaps and weaknesses in Facebook's privacy program" that posed "substantial risks to the public."
The FTC's case began in 2018 after it was revealed that the personal data of tens of millions of Facebook users improperly wound up in the hands of Cambridge Analytica, a data firm that worked on former president Donald Trump's 2016 campaign.
In a 2019 settlement, Facebook agreed to pay a $5 billion penalty over the privacy violations and to allow regular audits of its privacy practices.
The FTC on Wednesday said Meta misled parents on parental controls, with under-13-year-olds found to still be allowed to engage in chats with contacts not vetted by parents.
The regulator said Facebook also continued to give third-party apps access to private information after promising to cut off access if users failed to use the apps in the previous 90 days.
As a result, the FTC is seeking to force Meta to stop launching new products until the independent auditors find that the company's privacy policies are compliant.
The FTC is also threatening to ban Meta from making money off of children's data.
Facebook spokesman Andy Stone called the FTC's move a "political stunt," and said it was overstepping its authority.
"Despite three years of continual engagement with the FTC around our agreement, they provided no opportunity to discuss this new, totally unprecedented theory," Stone said.
FTC Commissioner Alvaro Bedoya, who will have a decisive vote on whether to move forward on the threat, also questioned his agency's authority to curb the monetization of kids' data.
He greenlit Wednesday's warning but added that he looked forward to hearing additional arguments and will consider them "with an open mind."
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