The Federal Trade Commission this week forced Syosset software company EchoMetrix Inc. to stop offering to sell childrens' private chats and instant messages to marketing companies.
The FTC action follows a $100,000 fine levied in September by the state attorney general's office for marketing, without parents' informed consent, the child-generated computer content.
The data was collected when parents, beginning in 2004, signed up for Sentry Parental Controls, a software program that monitors password-protected chats and messaging, and other computer use.
The only tipoff to parents about the sale of their childrens’ messages was a "vague statement" in the 30th paragraph of the terms of service, the FTC said. "Thus, Sentry purchasers were unaware that their children's computer activity… (was) fed into a database being promoted to marketers."
Peter Charles, chief operating officer of the company, said Thursday that EchoMetrix clearly made a major mistake and quickly agreed to the FTC's demands.
"It should have never happened and we agreed that it was wrong," Charles said. He added that "at no time did the company intend to ever use real names of people, so the data being gathered was anonymous and in aggregate."
The Nov. 30 U.S. District Court order requires EchoMetrix to destroy any such data remaining in its computer servers.
EchoMetrix commercialized the childrens’ data with a software program called "The Pulse” starting in June 2009, court records say. Its sales pitch offered what the children were writing "in their own words -- at the moment they say it.” The Pulse software "aggregates, collects, measures or analyzes data from user-generated digital content (including but not limited to Internet forums, message boards, chats, blogs and instant messaging conversations) for use by third parties,” court records say.
As part of the Sentry software service, that data was stored on EchoMetrix computer servers, which parents can access online from any computer. Customers were required to give their child's age and gender for the service, which cost $3.99 a month.