Electronic toymaker VTech settles for $650000 with FTC over children's privacy suit

09 Enero, 2018, 01:31 | Author: Misty Newman
  • Electronic toymaker VTech settles for $650000 with FTC over children's privacy suit

In its first action involving internet-connected toys, the Federal Trade Commission said Monday (Jan. 8) that electronic toy company VTEch Electonics had agreed to pay $625,000 to settle charges it violated privacy law (the Children's Online Privacy Protection Act [COPPA]) by "collecting personal information from children without providing direct notice and obtaining their parent's consent, and failing to take reasonable steps to secure the data it collected".

An FTC complaint filed in IL federal court said the company collected personal information from parents on its Learning Lodge Navigator online platform, where VTech's Kid Connect app was available for downloads. "The hacker remotely accessed defendants' test environment, and from there was able to traverse to the live environment, where defendants stored in clear text, among other things, parents' full names, mailing addresses, e-mail addresses, secret questions, and children's usernames". On Learning Lodge, close to 2.25 million parent accounts in the US and nearly 2.9 million related kid profiles could have been compromised, Steinorth wrote in an email. None of the information was encrypted, the court complaint alleged.

"The FTC is re-affirming its longstanding commitment to protecting consumers' privacy and the security of their information", Tom Pahl, acting director of the FTC Bureau of Consumer Protection, said in a call with reporters.

"This case shines a light on the growing market for children's electronic products and services", said Pahl.

VTech said that on November 14, 2015, an "unauthorized party" accessed customer data housed on its Learning Lodge app store database, which "allows our customers to download apps, learning games, e-books and other educational content to their VTech products". The Hong Kong-based VTech is also the parent company of LeapFrog, a popular brand for educational entertainment for children.

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"We are pleased to settle this two-year-old investigation by the FTC", said Allan Wong, chairman and group CEO of VTech Holdings.

Law enforcement in England arrested a 21-year-old Bracknell man in connection with the data breach in December 2015. VTech was not aware of the hack until a Motherboard journalist contacted the company for comment, according to the site.

VTech said in its privacy policy that most personal information was transmitted in encryption form, according to the complaint.

The consumer-protection agency found that the company's security and data protection methods were inadequate and that it did not do enough to prevent and repel an attack. Identity thieves reportedly favor stealing kids' data due to their clean credit histories, according to security experts. The children's privacy law also requires companies to use reasonable data security practices to protect personal data. This included about 638,000 Kid Connect accounts for children. Close to 130,000 children's profiles were created on Planet VTech accounts.

It also is required to implement a comprehensive data security program, which will be subject to independent audits for 20 years.

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