January 29, 2003
Companies that collected detailed personal information from millions of students, some as young as 10, 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 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, 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 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: www.ftc.gov/opa/2003/01/ercaalert.pdf.
