For Release: January
29, 2003 Student Survey Companies Settle FTC Charges
Data Collected For "Educational
Purposes" Also Sold To Marketers Who Targeted Kids
Companies that collected detailed personal information from
students as young as 10 years old by deceptively claiming that they would use the data
only for educational purposes have agreed to settle Federal Trade Commission charges that
their practices violated federal law. The FTC alleges that the companies sold personally
identifiable information about millions of students to target marketers. The proposed
consent agreement requires that the companies destroy any information they have collected
from children under 13 years old. In addition, the settlement bars the respondents from
using previously collected student information for non-educational-related marketing
purposes; bars them from using data collected in the future for non-educational-related
marketing purposes unless they disclose how the data actually will be used; and bars
further deceptive statements. Also today, the Attorney General of New York announced that
the companies have agreed to settle similar charges that their practices violated state
law.
"I hope that teachers and administrators will look
closely at what information surveys propose to collect from students and how it will be
used," said Howard Beales, director of the FTC's Bureau of Consumer Protection.
"The lesson in this case for marketers is that it's deceptive to promote a student
survey as purely educational, then use it for commercial marketing."
The FTCs settlement names Education Research Center of
America, Inc. (ERCA) and its principal, Marian Sanjana, and Student Marketing Group, Inc.
(SMG), and its principal, Jan Stumacher. ERCA and Sanjana are based in Pittsburgh,
Pennsylvania. SMG and Stumacher are based in Lynbrook, New York. This settlement is the
latest in a series of FTC cases targeting marketers who collect personal identifying
information from minors in violation of the FTC Act, which prohibits deceptive marketing
claims.
According to the FTC, ERCA sent surveys to teachers and
guidance counselors asking them to administer the surveys to their students in school.
Using statements like, "Your participation is critical to your students
post-secondary future," and "This information will be used by both public and
private universities and colleges," the survey asked for students names,
addresses, genders, dates of birth, religious affiliations, racial and ethnic background,
and a broad array of extracurricular interests.
Middle and junior high school teachers and counselors
received surveys stating, "As the trend toward colleges student recruitment has
moved earlier and earlier into the students high school career, we must begin to
administer this poll at the middle and junior high school level in order to provide a
complete report." The material states that ERCA "will compile the information
into a survey report that details the interests and trends among todays
students," and provide it to colleges and universities.
The FTC alleges that the survey's privacy statement,
accompanying cover letters, and Web site represent that the respondents will share the
information they collect only with colleges, universities, and other entities providing
education-related services. The complaint charges that the respondents shared survey data
with commercial marketers, including banks, consumers goods and service providers, and
other list brokers. In addition, the FTC charges that the respondents provided colleges
and universities with little if any of the information collected from middle and junior
high school students and compiled into survey reports. Further, the FTC alleges that the
information is primarily shared with commercial entities for marketing purposes. The
complaint charges that respondents' claims violated the FTC Act.
The proposed consent agreement announced today for public
comment bars the defendants from misrepresenting how information they collect will be used
or disclosed. It requires that if they collect information from students for
"non-education-related marketing purposes" they disclose how the information
will be used and that it is personally identifiable. It prohibits the disclosure for any
non-education-related marketing purpose of any personally identifiable information that
was collected through surveys distributed prior to July 30, 2002. Finally, it requires the
destruction of any personally identifiable information collected from any student under
the age of 13.
The FTC today released a consumer alert with information for
teachers and school administrators to consider when they are asked to distribute a survey
to students. The FTC recommends that teachers or administrators check to see if the survey
form includes a Privacy Statement. It's also wise to know:
- who is collecting the information;
- how the information will be used;
- with whom the information will be shared; and
- whether students will have a choice about the use of their
information.
Copies of the Alert are available at: http://www.ftc.gov/opa/2003/01/ercaalert.pdf
The Commission vote to accept the proposed settlement was
5-0. An announcement regarding the proposed consent agreement will be published in the
Federal Register shortly. The agreement will be subject to public comment for 30 days,
until February 28, after which the Commission will decide whether to make it final.
Comments should be addressed to the FTC, Office of the Secretary, 6th Street and
Pennsylvania Avenue, N.W., Washington, D.C. 20580. |