Assistant United States Attorney/Lead Counsel
Northern District of Ohio
Four Seagate, Suite 308, Third Floor
Toledo, Ohio 43604
(419) 259-6376

Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission ("FTC" or "Commission"), for its Complaint alleges that:

1. Plaintiff brings this action under Sections 1303(c) and 1306(d) of the Children's Online Privacy Protection Act of 1998 ("COPPA"), 15 U.S.C. §§ 6501-6506, 6502(c), and 6505(d), and Sections 5(a)(1), 5(m)(1)(A), 13(b), and 16(a) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. §§ 41-58, 45(a)(1), 45(m)(1)(A), 53(b), and 56(a), to obtain monetary civil penalties, a permanent injunction, and other equitable relief for defendant's violations of the Commission's Children's Online Privacy Protection Rule (the "Rule"), 16 C.F.R. Part 312.

JURISDICTION AND VENUE

2. This Court has jurisdiction over this matter under 28 U.S.C. §§ 1331, 1337(a), 1345, and 1355, and under 15 U.S.C. §§ 45(m)(1)(A), 53(b) and 56(a). This action arises under 15 U.S.C. §§ 45(a)(1) and 6502(c).

3. Venue in this District is proper under 15 U.S.C. § 53(b) and 28 U.S.C. §§ 1391(b)-(c) and 1395(a).

DEFINITIONS

4. For purposes of this Complaint, the terms "child," "collects," "collection," "Commission," "delete," "disclosure," "Internet," "online contact information," "operator," "parent," "person," "personal information," "third party," "verifiable consent," and "website or online service directed to children," are defined as those terms are defined in Section 312.2 of the Rule, 16 C.F.R. § 312.2.

THE CHILDREN'S ONLINE PRIVACY PROTECTION RULE

5. Congress enacted the Children's Online Privacy Protection Act, 15 U.S.C. §§ 6501-6506, in 1998 to protect the safety and privacy of children online by prohibiting the unauthorized or unnecessary collection of children's personal information by Internet website operators. The Act directed the Federal Trade Commission to promulgate a rule implementing COPPA. The Commission promulgated the Children's Online Privacy Protection Rule, 16 C.F.R. Part 312, on November 3, 1999 under Section 1303(b) of COPPA, 15 U.S.C. § 6502(b), and Section 553 of the Administrative Procedures Act, 5 U.S.C. § 553. The Rule went into effect on April 21, 2000.

6. The Rule applies to any operator of a commercial website or online service directed to children that collects, uses, and/or discloses personal information from children.

7. The Rule requires a subject website operator to meet specific requirements prior to collecting online, using, or disclosing personal information from children, including but not limited to:

a. Posting a privacy policy on its website providing clear, understandable, and complete notice of its information practices, including what information the website operator collects from children online, how it uses such information, its disclosure practices for such information, and other specifically required disclosures;

 

b. Providing clear, understandable, and complete notice of its information practices directly to parents when required by the Rule;

 

c. Obtaining verifiable parental consent prior to collecting, using, and/or disclosing personal information from children;

 

d. Giving parents the option to consent to the collection and internal use of their children's personal information without consenting to the disclosure of that information to third parties;

 

e. Providing a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance;

 

f. Not conditioning children's participation in an activity upon children disclosing more personal information than is reasonably necessary to participate in that activity; and

 

g. Establishing and maintaining reasonable procedures to protect the confidentiality, security, and integrity of personal information collected from children.

8. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the Rule constitutes an unfair or deceptive act or practice, in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1). See also COPPA, 15 U.S.C. § 6502(c).

DEFENDANT

9. Defendant The Ohio Art Company is an Ohio corporation with its principal office or place of business located at One Toy Street, P.O. Box 111, Bryan, Ohio 43506.

10. Since at least April 21, 2000, defendant has been the operator of www.etch-a-sketch.com, a website on the Internet that is directed to children. Defendant uses the website to advertise its toys. Defendant markets its products throughout the United States.

11. The acts and practices of defendant alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. § 44.

DEFENDANT'S COURSE OF CONDUCT

12. Defendant operates the www.etch-a-sketch.com website, which provides information about its toys, including the "Etch A Sketch" drawing toy. The subject matter, visual content, and language of this website are directed to children under the age of 13. For example, the site features a cartoon character named "Etchy" - an Etch A Sketch sporting sunglasses, purple hair and legs. Etchy invites visitors to play "cool games," such as drawing with an online Etch A Sketch, finding hidden numbers, letters and shapes, and coloring pictures of Etchy and friends. The site also contains an "interactive story" titled, "Etchy Goes to a Birthday Party." (See Exhibit A.)

13. Defendant collects or has collected personal information from children through the operation of the "Etch A Sketch Birthday Club" ("Birthday Club") portion of its website and thus is an "operator" as defined in the Rule.

Defendant's Information Collection Practices

14. Children seeking to register for the Birthday Club have been presented with an online form to fill out with personal information. Although defendant's website instructed children to "get your parent or guardian's permission first," the defendant neither notified nor obtained verifiable consent from any parent or guardian prior to collecting this personal information. (See Exhibit B.)

15. In this manner, defendant collected personal information from more than 2,500 children, including the child's first and last name, street address, email address, age and date of birth. According to defendant's website, this information was to be used to send an Etch A Sketch toy to ten randomly selected winners on their birthdays. The personal information required to join the club was more than was reasonably necessary to allow children to participate in the Birthday Club. Defendant provided no means for parents to review or delete the information collected from their children.

Defendant's Privacy Policy

16. Defendant posted "Privacy Policy Statements" on its website, but these statements did not clearly, understandably, or completely disclose all of its information collection, use, and disclosure practices and other disclosures required by the Rule. (See Exhibit C.)

DEFENDANT'S VIOLATIONS OF THE CHILDREN'S ONLINE PRIVACY PROTECTION RULE

17. Since at least April 21, 2000, defendant has been an operator of a website directed to children, and has collected personal information from children.

18. In numerous instances, including the acts and practices described above, defendant has collected personal information from children in violation of the Rule, including:

a. Failing to provide sufficient notice on the website of what information it collects online from children, how it uses such information, its disclosure practices, and all other required content, in violation of Section 312.4(b) of the Rule, 16 C.F.R. § 312.4(b);

 

b. Failing to provide notice to parents of what information it collects online from children, how it uses such information, its disclosure practices, and all other required content, in violation of Section 312.4(c) of the Rule, 16 C.F.R. § 312.4(c);

 

c. Failing to obtain verifiable parental consent before any collection, use, and/or disclosure of personal information from children, in violation of Section 312.5 of the Rule, 16 C.F.R. § 312.5;

 

d. Failing to provide a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance, in violation of Section 312.6 of the Rule, 16 C.F.R. § 312.6; and

 

e. Conditioning children's participation in an activity on their disclosing more personal information than is reasonably necessary to participate in such activity, in violation of Section 312.7 of the Rule, 16 C.F.R. § 312.7.

DEFENDANT'S UNFAIR OR DECEPTIVE ACTS OR PRACTICES
IN VIOLATION OF THE FTC ACT

19. Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), provides that "unfair or deceptive acts or practices in or affecting commerce are hereby declared unlawful."

20. Pursuant to Section 18(d)(3) of the FTC Act, 15 U.S.C. § 57a(d)(3), a violation of the Rule constitutes an unfair or deceptive act or practice in violation of Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1). See COPPA, 15 U.S.C. § 6502(c).

21. By and through the acts and practices described in Paragraph 18 above, defendant has violated Section 5(a)(1) of the FTC Act, 15 U.S.C. § 45(a)(1).

CIVIL PENALTIES, INJUNCTION AND OTHER RELIEF

22. Defendant has violated the Rule as described above with knowledge as set forth in Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A).

23. Each collection, use, or disclosure of a child's personal information from April 21, 2000 through the filing of this Complaint, in which defendant has violated the Rule in one or more of the ways described above, constitutes a separate violation for which plaintiff seeks monetary civil penalties.

24. Section 5(m)(1)(A) of the FTC Act, 15 U.S.C. § 45(m)(1)(A), as modified by Section 4 of the Federal Civil Penalties Inflation Adjustment Act of 1990, 28 U.S.C. § 2461, and Section 1.98(d) of the FTC's Rules of Practice, 16 C.F.R. § 1.98(d), authorizes this Court to award monetary civil penalties of not more than $11,000 for each such violation of the Rule.

25. Under Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), this Court is authorized to issue a permanent injunction against defendant's violation of the FTC Act, as well as such ancillary relief as may be just and proper.

PRAYER

WHEREFORE, plaintiff requests this Court, pursuant to 15 U.S.C. §§ 45(a)(1), 45(m)(1)(A), 53(b) and 57b, and the Court's own equitable powers to:

(1) Enter judgment against defendant and in favor of plaintiff for each violation alleged in this Complaint;

 

(2) Award plaintiff monetary civil penalties from defendant for each violation of the Rule;

 

(3) Permanently enjoin defendant from violating the Rule; and

 

(4) Award plaintiff such additional relief as the Court may deem just, proper, or necessary to redress injury to consumers resulting from defendant's violations of the Rule.

DATED: