Markets Wired

EchoMetrix, Inc., has settled Federal Trade Commission charges that it failed to adequately inform parents using its web monitoring software that information collected about their children would be disclosed to third-party marketers.

EchoMetrix sells its Sentry software to parents to allow them to monitor their children’s online activities. When Sentry is installed on a computer, parents can log in to their Sentry account and view the activity taking place on the target computer, including chat conversations, instant messaging and the web history.

According to the FTC, EchoMetrix also advertised Pulse, a web-based market research software program that it claimed would allow marketers to see “unbiased, unfiltered, anonymous” content from social media websites, blogs, forums, chats and message boards. One source of content available to Pulse users, the FTC alleged, was portions of the online activity of children recorded by the Sentry software.

The FTC charged that EchoMetrix violated federal law by failing to adequately disclose to parents, the Sentry subscribers, that it would share the information it gathered from their children through the use of its Sentry monitoring program with third-party marketers through Pulse. The only disclosure made to parents about this practice was a vague statement approximately 30 paragraphs into a multi-page end user license agreement.

To settle this case, EchoMetrix has agreed not to use or share the information it obtained through its Sentry program – or any similar program – for any purpose other than allowing a registered user to access his or her account. The settlement order also requires the company to destroy the information it had transferred from the Sentry program to its Pulse database of marketing information.

“Companies need to make clear disclosures about how they are going to use and share personal information they collect online – even more so when that information relates to children,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “In this case – because selling children’s information to marketers is completely contrary to the purpose of the parental monitoring software used to collect it – EchoMetrix agreed to an order that simply prohibits the company from using or sharing Sentry information for other purposes.”

The settlement also contains standard reporting and record-keeping provisions to allow the FTC to monitor compliance.

Complaints filed by both the Electronic Privacy Information Center (EPIC) and the Center for Digital Democracy (CDD) helped bring this matter to the FTC’s attention.

The Commission vote to file the complaint and settlement was 5-0. The complaint and settlement were filed in U.S. District Court for the Eastern District of New York.

NOTE: The Commission files a complaint when it has reason to believe that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law. Stipulated final orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. A stipulated final order requires approval by the court and has the force of law when signed by the judge.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(Echometrix)