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FTC settles privacy complaints against Web firms

November 8, 2011 |  3:53 pm


The Federal Trade Commission said Tuesday that it settled complaints alleging that two online companies  deceptively collected personal information from consumers, including children.

The founder of Skid-e-kids, a social networking site for preteens, was accused of violating the Children's Online Privacy Protection Act by gathering the names, ages, and email addresses from 5,600 children without obtaining prior parental approval.

In a separate case, the FTC alleged that online advertiser ScanScout Inc. used deceptive practices to track consumers’ behavior online even when they followed the company's instructions to block the data-gathering. The company uses information to deliver targeted advertisements to the consumer.

The FTC vowed early this year to take a tougher stance on protecting consumers’ privacy online. In March, the commission began cracking down on behavioral ads, which collect personal data from a user’s computer browser and then send targeted ads based on their interests.

In addition, federal regulators are looking to update rules regarding children’s privacy to reflect the changing online landscape in which social networks and smartphone apps are becoming more prevalent.

Last month, the FTC proposed tougher privacy protections for children younger than 13, broadening requirements covering the collection of personal information by websites and online apps, as well as how they obtain parental approval.

In the complaint against Jones O. Godwin, the operator of Skid-e-kids, the FTC alleged that he allowed children to register without seeking permission from their parents. The company’s online privacy policy says that children must provide a valid parent’s email address in order to register on the website. But the FTC found that the 5,600 children who registered were able to provide personal information, including their birthday, email address, first and last names, and city of residence without parental consent.

Godwin was ordered to pay a $100,000 civil penalty, which can be reduced to $1,000 if he complies with oversight provisions.

In the ScanScout case, the FTC alleged that the online advertiser deceptively claimed that consumers could opt out of targeted ads by changing their computer’s Internet settings to block cookies. What ScanScout used were so-called Flash cookies, which could not be blocked.The FTC ordered ScanScout to provide a user-friendly way for consumers to opt out of being tracked.


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--Angel Jennings