The Federal Trade Commission yesterday confirmed it had settled a lawsuit with Student Marketing Group Inc. and Educational Research Center of America and said the companies had deceptively collected information from students as young as 10.
According to the FTC, the two companies agreed to destroy information they have collected from children younger than 13 and not to use any student information already in their possession for non-educational marketing purposes. The FTC announcement followed a statement from the companies Jan. 28 that they had settled a suit with the agency.
The FTC said the companies told “millions” of students to whom it distributed surveys that information collected would be used only by educational institutions, including colleges and universities, for marketing purposes. But the information also was used for commercial marketing, including consumer goods, the FTC said.
The companies did not admit wrongdoing, and there was no monetary penalty in the settlement. An FTC official indicated that the agency had begun taking a longer look at the list industry.
“We've been interested in the market for list brokers and exploring the privacy problems that industry might have,” said Howard Beales, director of the FTC's consumer protection bureau.
In October, American Student Data, Mineola, NY, agreed with the FTC to restrict the use of high school student data it collected through surveys. That case, along with the recent settlement with Student Marketing and Educational Research Center, represents the first time the FTC has scrutinized privacy disclosures made by collectors of data offline.
“Whether online or offline, privacy promises should shed light on a company's practices, not obscure them,” Beales said.
Beales acknowledged that the companies mainly used data for their stated purpose of helping educational institutions in the marketing. That use still will be permitted under the settlement, though the companies must add new disclosures to the surveys if they wish to use student information for commercial purposes.
In early January, Student Marketing and Educational Research Center settled a similar but separate lawsuit with the New York Attorney General's office concerning disclosures in its surveys and the use of the data they collected from students.