The threat privacy issues pose for marketers was underscored last week when online community GeoCities, settling the first privacy enforcement case brought by the Federal Trade Commission, agreed to take steps that could destroy personal data and the Web home pages created by up to 40,000 kids.
Accused by the FTC of obtaining information from children under 13 without seeking proper parental approval--and misrepresenting how personal information gathered from adults was being used--Santa Monica, Calif.-based GeoCities agreed to a series of steps ranging from including prominent privacy disclosures to possible destruction of some of the data it has been gathering during its four-year existence. Among the restrictions:
`THAT'S VERY STRONG'
"That's very strong. I am obviously pleased," said Kathryn Montgomery, president of Citizens for Media Education, the group whose concern about online privacy issues for children launched the FTC inquiry. "It underscores the need for laws so we don't have to wait for egregious cases."
GeoCities, whose position as a Web community makes it one of the more popular Web sites, had earlier revealed it was negotiating a settlement with the FTC. Last week the company denied it violated federal laws, but said it had come to an agreement "to resolve the matter in an expeditious manner."
GeoCities President-CEO Thomas R. Evans said he expected few of the 40,000 children would actually see their pages eliminated.
"The chance of having them all deleted is pretty minimal," he said, adding the number "isn't material" and noting GeoCities has 2.3 million members and is gaining 9,000 members a day. Mr. Evans said the FTC had also praised GeoCities for stepping forward and agreeing to undertake important privacy restrictions.
The FTC charged GeoCities had sought information from adults for one purpose but used it for another. Income, education and occupation information that GeoCities told consumers would only be used to determine appropriate mailings of interest was instead provided as a database to third parties.
`CUSTOMERS WERE MISLED'
"GeoCities misled its customers, both children and adults, by not telling the truth about how it was using personal information," said Jodie Bernstein, director of the FTC's Bureau of Consumer Protection, in a statement.
Mr. Evans, however, said the information was provided to an affiliate company he wouldn't identify, which never used it.
In a move that could have significant implications, the FTC also challenged the presence of a children's site that wasn't clearly identified as not emanating from GeoCities. The FTC required GeoCities to make clear that information gathered by the GeoCities GeoKidz Club was being obtained by companies other than GeoCities.
Copyright August 1998, Crain Communications Inc.