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Jim Flynn: FTC helps protect identities, children

New IdentityTheft Scam

In case you missed it, Jan. 29-Feb. 2 was Tax Identity Theft Awareness Week. This event was an invention of the Federal Trade Commission to remind us to be careful because identity thieves are hovering over income tax filings and refunds.

Information about tax identity theft, and how to prevent it, can be found at the FTC’s website,

Meanwhile, the FTC announced Jan. 8 a settlement of its enforcement action against a Hong Kong company doing business in the U.S., VTech Electronics. VTech sells high-tech toys and online apps for children, including something it calls “Kid Connect,” which, as best I can tell, is a Facebook equivalent for 6 year olds.

The FTC went after VTech for violations of the Children’s Online Privacy Protection Act. This law was passed in 1998. It contains a comprehensive set of rules applicable to anyone engaged in internet-related sales to, and who gather personal information about, children. These rules are intended to give parents a modest amount of control over what their children are up to online and to protect the privacy of personal information about children and their parents.

VTech’s online products gathered a large amount of personal information about children and their parents and, according to the FTC’s complaint, filed in an Illinois federal court, the company failed to obtain required parental consents and failed to “take reasonable steps to secure the data it collected,” as required by the act. The complaint says 2.25 million parents had registered with VTech and had opened accounts for 3 million children as of November 2015.

Although VTech’s privacy policy assured parents the information it was collecting was encrypted and secure, these assurances were false and nothing was encrypted. This came to (glaring) light in November 2015 when VTech learned its customer data had been stolen by a hacker. VTech only discovered the theft when a journalist brought it to the company’s attention.

The settlement reached with VTech requires payment of a $650,000 penalty or fine. It also requires VTech to clean up its act by establishing a comprehensive data security program, subject to independent audits for 20 years.

This is the FTC’s first children’s privacy and security case involving online-connected toys. The FTC is publicizing the case as a warning to other companies looking to profit from the quickly growing children’s internet marketplace.

Another law commonly known as the U.S. SAFE WEB Act allows the FTC to share information with foreign counterparts. Under this law, the FTC has been providing information about the VTech case to the Office of the Privacy Commissioner of Canada, which will soon be releasing its own report.

Jim Flynn is with the Colorado Springs firm of Flynn & Wright, LLC. You can email him at [email protected] or via his website,

Source: on 2018-02-17 11:52:30

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