Monday, 22 January, 2018

VTech faces US$650000 fine over broken data laws

Electronic Toy Maker VTech Settles FTC Allegations That it Violated Children's Privacy Law and the FTC Act | Federal Toymaker VTech Settles Charges of Violating Child Privacy Law
Terence Owen | 10 January, 2018, 02:50

Electronic toy maker VTech has reached a settlement with the Federal Trade Commission, with the company agreeing to pay a $650,000 fine for violating a USA children's privacy law.

An electronic toy-maker has agreed to pay $650,000 to settle charges from the Federal Trade Commission that it collected personal information on hundreds of thousands of children without their parents knowing. The complaint went on to allege that VTech failed to use reasonable and appropriate data security measures to protect personal information it collected.

Due to security shortcomings, a hacker in 2015 was able to access the VTech computer network and take personal information of customers, including names of adults and children as well as addresses and email addresses, the complaint said.

VTech, which makes tablets, smartwatches, and other connected toys for kids, settled the complaint without admitting or denying any wrongdoing.

VTech gathered data on nearly 650,000 children through its Kid Connect app that was placed in numerous electronic toys it makes.

Hong Kong-based VTech Electronics Ltd and its USA subsidiary agreed to pay $650,000 to settle the charges brought by the FTC, the US agency said in a statement.

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Firms are required to notify and obtain consent from parents of children under 13 when collecting such data in America, according to the Children's Online Privacy Protection Act. Information was also collected through the Kid Connect app, federal officials said.

As of November 2015, about 2.25 million parents had registered and created accounts with Learning Lodge for almost 3 million children. Close to 130,000 children's profiles were created on Planet VTech accounts.

Children's information was linked to their parents' so that the hacker could tie a photo found on a kids' account to their physical address, according to the complaint. The regulator accused VTech of violating the FTC Act, which prohibits deceptive practices, because a privacy policy falsely stated data sent via the Learning Lodge App is encrypted.

VTech says it has since overhauled its data security policy, taken measures to strengthen the protection of customer data, and brought its collection methods inline with COPPA.

In addition to the monetary settlement, VTech is permanently prohibited from violating COPPA in the future and from misrepresenting its security and privacy practices as part of the proposed settlement.

The FTC collaborated with the Office of the Privacy Commissioner of Canada, which is releasing its own Report of Findings. The complaint and stipulated final order was filed in the U.S. District Court for the Northern District of IL.

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