Federal regulators have decided that the way many Internet sites collect personal information from children violates federal trade rules because the sites do not notify parents about how the data will be used.
Dozens of World Wide Web sites attempt to elicit information from children, including their names and addresses, by offering free product samples, the chance to enter contests and other inducements, without clearly alerting either children or their parents that the information could be used for marketing efforts.
In a letter released yesterday, the Federal Trade Commission called that practice deceptive and warned Web site operators to include clear notices on the site to parents. The FTC also said that operators of Web sites must obtain parental consent before releasing personal information to a third party.
The FTC letter -- the first time regulators have articulated a policy regarding the collection of information from children -- represents a compromise between industry organizations and advocacy groups. Children's groups have called for the FTC to require parental consent via fax or letter before any information is collected from children. Businesses have called such demands impractical and have urged concerned parents to monitor their children's Web surfing more closely.
"We see this as a good first step," said Kathryn Montgomery, director of the Center for Media Education, a Washington-based children's advocacy group. "It sends a very strong signal to marketers that they need to fully disclose to parents what they're doing."
The group released a study last month showing that about 90 percent of the 38 largest child-oriented Web sites attempt to gather personal information. Forty percent of them use incentives, such as free merchandise and sweepstakes, to collect the information, while only 20 percent ask children to ask their parents before providing information, the study found.
The site for Jelly Belly candies is one of the few that attempts to warn visitors, saying, "Anything you disclose to us is ours. That's right -- ours. So we can do anything we want with the stuff you post. We can reproduce it, disclose it, transmit it, publish it, broadcast it, and post it someplace else."
But Lee Peeler, an associate director of the FTC's bureau on consumer protection, said yesterday that a warning such as Jelly Belly's "would not be adequate disclosure" because it does not specify how the information would be used.
The letter was released after FTC had investigated, at the request of the Center for Media Education, an Internet Web site for children ages 4 to 15 called "KidsCom" that is operated by Milwaukee-based Spectracom Inc. Before KidsCom changed its Web site, it asked children to fill out questionnaires about favorite television shows, musical groups and other interests.
FTC staff recommended that no action be taken against KidsCom because the site had been modified to meet regulators' concerns.