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December 1st, 2010
FTC Settles with Company About Disclosure of Information Collection Practices
The Federal Trade Commission ("FTC") recently announced that EchoMetrix, Inc. settled FTC charges that it failed to adequately inform parents that it made their children’s information available to third-party marketers.
EchoMetrix sold a software product that allowed parents to monitor their children’s online behavior. The FTC charged that EchoMetrix violated federal law by failing to adequately disclose to parents that it would share the information that it gathered through parents’ use of this software. The FTC alleged that EchoMetrix’s only disclosure about this practice was a vague statement approximately 30 paragraphs into a multi-page end user license agreement, which stated that it may use collected information to "…improve our services, contact you, conduct research, and provide anonymous reporting for internal and external clients."
As part of the settlement, EchoMetrix agreed not to share any information for any purpose other than to allow a user to access his/her account.
While privacy has long been a hot-button issue for the FTC, this settlement highlights the FTC’s more recently expressed concern that critical disclosures about information collection and use practices (particularly disclosures about unexpected uses of information) be made in a clear and effective manner. Here, the fact that EchoMetrix was alleged to be disseminating children’s information combined with the fact that EchoMetrix marketed its product as enabling parents to protect their children from unscrupulous online behavior, raised heightened concerns. David Vladeck, Director of the FTC’s Bureau of Consumer Protection, said “Companies need to make clear disclosures about how they are going to use and share personal information they collect online – even more so when that information relates to children.”
The lesson for any entity collecting information through its website is evident: Clear and conspicuous disclosure of what you are collecting and what you are doing with the collected information is essential.
Read FTC's full press release - "FTC Settles with Company that Failed to Tell Parents that Children's Information Would be Disclosed to Marketers".
If you have any questions about this settlement and how it may affect you and your website, or other advertising/marketing law issues, please contact Terri J. Seligman at (212) 826 5580 or tseligman@fkks.com, Jeffrey A. Greenbaum at (212) 826 5525 or jgreenbaum@fkks.com or any member of the Frankfurt Kurnit Advertising Group.
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