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Online privacy violation leads to big FTC fine for ecommerce business

November 14, 2011 0 Comments

The Federal Trade Commission (FTC) has announced a settlement, including a $100,000 fine, with Skidekids.com, an social networking ecommerce platform for kids over the site’s failure to adhere to its privacy policy. The FTC has charged Skidekids with making deceptive claims in its online privacy policy about the site’s info collection practices. Further, and more seriously, the FTC charged the site with collection personal information from over 5,000 minors without prior parental consent which is required by the Children’s Online Privacy Protection Act (“COPPA”).

The FTC’s COPPA Rule requires that website operators notify parents and obtain their consent before they collect, use or disclose personal information from children under 13. The Rule also requires that website operators post a privacy policy that is clear, understandable and complete.

According to the FTC, Skid-e-kids is a social networking site targeted at children ages 7-14 that allows them to register, create and update profile information, create public posts, upload pictures and videos, and “friend” and send messages to other Skid-e-kids members.

While Skidekid.com’s online privacy policy required that minors provide an email address for a parent in order to activate the account, the FTC accused Skidekid of never actually following that policy. As a result, the FTC and the ecommerce website have agreed to a settlement which includes the deletion of the 5,000 plus accounts and fines of up to $100,000.

Takeaway: In addition to the obvious online privacy issues associated with running a website targeting minors, this case serves as one in many recent examples of the FTC going after internet businesses who either fail to have or fail to abide by an existing online privacy policy.

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