The Federal Trade Commission is taking a sweeping view of its right to regulate information that Internet marketers and online services can collect from kids. It's so sweeping, in fact, that it's drawing fire from one FTC commissioner.
In a first indication of the rules that will be used to evaluate marketer Web sites, FTC staff told the Center for Media Education that it would consider as flagrantly "unfair" any marketer telling children they can win prizes if they provide personal information and then using the information for further marketing purposes.
The letter, sent last week, said marketers that collect any personally identifiable information without parental permission and then sell it also would be engaging in an unfair practice.
LIMITS ON PERSONAL DATA
In a third step, the FTC missive indicated online services that allow members to look at each others' profiles may have to institute limits on the reading of personal information about children and teen-agers without parental permission.
The unusual letter responded to the center's May 1996 petition urging action against some of the techniques used on the Kids.com site and was approved on a 4-1 vote with Commissioner Mary Azcuenaga opposing it. The letter was issued even before commissioners considered a recent hearing on some of the same issues. Since the Center for Media Education petition, Kids.com has made substantial changes.
The center complained last year that the site was the worst example of what was wrong with Web marketing, asking for personal information from children--including parental product and activity preferences--in return for the chance to "find a key pal" or win points toward a prize.
Nowhere was the real database purpose of the information revealed, nor was there any reference to asking parents' permission.
NO ACTION RECOMMENDED
Because of Kids.com's changes, the FTC staff recommended against taking any action against the site.
However, Jodie Bernstein, director of the Bureau of Consumer Protection, in the letter told the Center for Media Education that FTC believed the site had violated consumer protection laws.
"It is a deceptive practice to represent that a Web site is collecting personally identifiable information from a child for a particular purpose when the information will also be used for another purpose, which parents would find material," said Ms. Bernstein's letter.
The letter also proposed disclosure to parents of plans to sell any information collected and went further to say that even the free availability to other online subscribers without parental permission may violate consumer protection laws.
Ms. Azcuenaga said she felt the staff letter erred in proposing a different standard for information collection on the Web, and the section on the availability and sale of information was too broad.
"As written, it would prohibit any identifiable information. It would be a big change in the rules of target marketing," she said.
"I think the commission ought to consider this a little more deeply before allowing a statement of this breadth to go out," she said.
The Center for Media Education, however, was pleased with the decision, though it would like to see "parental notice" better detailed, said President Kathryn Montgomery.
Copyright July 1997, Crain Communications Inc.