VTech Settles Children’s Privacy Violation Charges with FTC, Agrees to $650,000 Payment

Electronic toymaker VTech agreed to pay $650,000 to settle FTC charges it violated children’s privacy rules, the agency announced Monday. VTech’s “Kid Connect” app collected information on “hundreds of thousands” of children without parental notification, the FTC said, saying the case is the first children’s privacy case involving internet-connected toys. VTech failed to use “reasonable and appropriate” measures to safeguard the collection of information, the FTC said. VTech was among several makers of smart toys flagged for criticism in a Senate Commerce Committee minority staff report released in December (see 1612140041) that urged toymakers to build security measures into products at the outset of production. VTech didn't comment. The settlement also requires VTech to implement a data security system and make it available to independent audits for the next 20 years. “There’s not a consistent practice over time of companies making sure they are always staying one step ahead of the hackers,” said FTC Consumer Protection Bureau acting Director Tom Pahl during a call with reporters. The settlement will ensure “that kind of program they develop is in place and works.” The VTech case “sends a message to parents,” who “should read a company’s privacy practices, make sure that companies get their permission to collect their children’s information and be aware of their other rights,” Pahl said. VTech CEO Allan Wong said the company "is pleased to settle this two-year-old investigation by the FTC" and has instituted new security protocols to protect customer data and comply with FTC notice and consent requirements.