The Federal Trade Commission recently settled with EchoMetrix, a company that develops software and specializes in market research derived from the web. The FTC’s complaint, filed in federal court in New York, alleged that EchoMetrix failed to disclose adequately to parents that information gathered about their children while using EchoMetrix’s Sentry monitoring software would be disclosed to third parties.
The Sentry software allows parents to monitor the computer activities of their children by providing access to activity occurring on a computer with the Sentry program installed. Using the software, when a parent logs on, he or she can see information related to the target computer’s activity related to blogs, chat rooms, message boards, and other web-based interfaces.
In its Complaint, the FTC sought a permanent injunction, alleging that EchoMetrix was taking the information that it gathered from computers with the Sentry program and sharing it with third-party marketing companies through Pulse, an EchoMetrix program that purportedly allowed these marketing companies to receive the content recorded from Sentry in an “unbiased, unfiltered, [and] anonymous” manner. The FTC asserted that EchoMetrix’s disclosure of this practice was inadequate, offering only a “vague statement in the Sentry EULA.” The agency also alleged that this information was just as difficult to find on the company’s website: although a user was given a means to opt out of the “collection process,” no description of this process was provided.
The final order regarding the settlement stipulates that EchoMetrix may not use information obtained through its Sentry program for any purpose other than granting access to a registered user to see information stored in relation to that user’s account. The order also requires EchoMetrix to dispose of information that it had previously transferred from Sentry to Pulse. The FTC will be monitoring EchoMetrix’s observance of these provisions as well as the other compliance and record-keeping requirements of the order. In September, EchoMetrix paid out $100,000 to settle a similar inquiry by the New York Attorney General.
The FTC’s position in this case is a strong warning: as emphasized by David Vladeck, the Director of the agency’s Bureau of Consumer Protection, companies need to make “clear disclosures” about how they are dealing with personal information, especially when “that information relates to children.”
UPDATE (12/2/2010): Representative Edward J. Markey (D-Mass.), author of COPPA, announced that he plans to introduce a “Do Not Track” requirement to prohibit tracking kid’s online activity.