2 firms settle online-privacy complaints

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

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

In a separate case, the FTC charged online advertiser ScanScout Inc. with using deceptive practices to track consumers’ behavior online even when they followed its instructions to block data collection.

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, those that are targeted toward users based on data about their interests collected from their Web browsers.


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 found that the online advertiser deceptively claimed that consumers could opt out of targeted ads by changing their computer’s Internet settings to block cookies. In actuality, ScanScout used 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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