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Meet Wally, Wishbox's way to meet privacy act

Tuesday, April 18, 2000

By Frank Reeves, Post-Gazette Staff Writer

Actor Jason Alexander is best known as the character George Costanza in the sitcom Seinfeld.

But soon he'll be heard as the voice behind Wally, the wisecracking mascot on, a Pittsburgh-based online gift-registry site aimed at teens but with a following among younger kids as well.

    On the 'Net:

Visit the FTC Web site for details of the new rules for protecting kid's privacy online.


And as Wally Wishbox, Alexander has a gentle warning for younger kids: "Under 13? Wally distantly remembers those days. We need your Mom or Dad to help you sign up."

It's all part of an effort to bring into compliance with new federal rules designed to protect the privacy of children online, said Lou Weiss, the company's chairman.

"We've always been concerned about privacy. We're enhancing our privacy policy," Weiss said. "Ten percent of our users are in the under-13 group. We are not allowing them to register without parental approval."

Weiss said the company is also overhauling the notice about the firm's privacy and information-collection policies that appears on its Web site.

The new federal regulations, which go into effect Friday, are the result of the Children's Online Protection Act, which Congress passed in 1998.

The regulations put "parents in control over the information collected from their children online, and is flexible enough to accommodate many business practices and technological changes occurring on the Internet," FTC Chairman Robert Pitofsky said after the agency published a final version of the rules last fall.

The new rules, which the FTC is responsible for enforcing, require commercial Web sites to obtain "verifiable parental consent" before collecting, using or disclosing personal information from children under 13. The rules apply to commercial Web sites and online services geared to children under 13 or those that collect information from them.

Congress was prodded into action as a result of rising public concern over Internet privacy issues -- especially the eliciting of personal and financial information from children, through the use of games, surveys and prizes, without parental consent.

In many instances, unknown to the children or their parents, the data was sold to marketing analysts interested in tracking the buying habits of children.

In March 1998, the Federal Trade Commission surveyed 212 commercial Web sites directed at children. Only 24 percent posted privacy policies. More disturbing to the FTC, only 1 percent required parental consent to collect or disclose the information provided by children.

"Children don't understand the significance of what information they are giving out or who will get it. So the key [to any regulations] is requiring parental consent," said Loren Thompson, a lawyer in the FTC's Division of Advertising Practices.

But Peter Kay, director for new media online at Sports Illustrated for Kids, said he is worried about the unintended consequences of the FTC rules, despite their good intentions.

"Kids want to communicate. The rules could force kids to do things in a sneaky way," Kay said.

Angela Campbell, a professor at the Georgetown University Law Center, said no issue generated more discussion during deliberation over the FTC rules than how companies should obtain verifiable parental consent. In the end, the FTC adopted an approach that didn't entirely satisfy privacy and consumer groups.

Over the next two years, the new rules give companies some flexibility in determining how they obtain verifiable parental consent. Companies that intend to use the information in ways that pose the greatest threat to children's safety and privacy -- for example, disclosing information to a third party or making it publicly available through chat rooms -- are held to a stricter standard than companies that intend to use the information for their own internal marketing purposes.

Companies that disclose personal information to third parties must, for example, verify parental consent by contacting the parent and by requiring a credit card, digital signature or e-mail accompanied by a PIN or password.

But after April 2002, all commercial Web sites must adopt the more reliable standards, which are harder for children to circumvent.

The rules also permit business and industry groups to set up self-regulatory guidelines. The FTC would have to approve the guidelines, making certain that they provide protection to children the "same or greater" than the Children's Online Privacy Protection Act. If companies follow the guidelines, they would be considered to be in compliance with federal law.

The FTC is considering the application of two organizations to become industry self-regulators:, based in Virginia, and the Children's Advertising Review Unit, which the advertising industry formed in 1974 to scrutinize advertising to children.

The unit, based in New York City, has ties to the Council of Better Business Bureaus.

In written testimony, Georgetown University's Campbell, on behalf of several privacy and consumer groups, urged the FTC to reject's application, saying the proposed guidelines fail to protect children's privacy. She said if the FTC approved what, in her view, are inadequate guidelines, it would "set a dangerous precedent that undermines the goal of protecting children's privacy online."

By requiring consumers to pay a fee to file complaints, Campbell said it would discourage consumers from filing "meritorious complaints."

Campbell also said Privacy relied too much on consumer complaints to determine whether companies are obeying the guidelines.

Officials of could not be reached for comment.

Other provisions of the FTC rules:

Require Web site operators to post a clear and prominent link to its data-gathering practices on its home page and each area where personal information is gathered from children.

Allow parents to give a Web site permission to collect information without automatically giving it permission to disclose the personal information to third parties.

Allow Web sites to obtain some information from children without parental consent, such as a one-time request by a child for online homework help.

Fine violators up to $11,000 for each offense and expose them to possible civil action.

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