The Federal Trade Commission has won vigorous applause for its first step to define the limits of what information can be collected from children online.
The agency released a letter Wednesday outlining its findings in an investigation of KidsCom, a site that drew a 1996 complaint from the Center for Media Education for collecting specific personal information from children with no disclosure that the site owners intended to sell the data.
Among other features, KidsCom invited children to sign up for cash prizes, and a pen-pal service site collected names, birth dates, home addresses, and information about what products and activities children like. Some of the information was aggregated and sold as marketing data.
The commission staff letter said a key issue in the collection and disclosure of children's data is parental notification. In finding KidsCom in violation of FTC rules, the letter said it is a deceptive practice to collect personally identifiable information from children for one purpose without notifying parents that the data may be used for other purposes. In addition, Web sites must notify parents before they release personally identifiable information to third parties, the staff said.
In a statement, center officials welcomed the FTC action as a victory for the future of the Internet.
"The ground rules for marketing to children that are set in place today will be able to guide the development of this new interactive medium, ensuring that the concerns of children and their families are taken seriously," said center president Kathryn Montgomery.
The agency staff found that KidsCom was likely guilty of unfair and deceptive practices. But noting a series of steps KidsCom has taken since the center filed its complaint to notify parents about data collection, the inquiry recommended against enforcement action.
