Liberty Financial Companies, Inc.; Analysis To Aid Public Comment

[Federal Register Volume 64, Number 103 (Friday, May 28, 1999)]
[Notices]
[Pages 29031-29032]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-13612]


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FEDERAL TRADE COMMISSION

[File No. 9823522]


Liberty Financial Companies, Inc.; Analysis To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received by July 23, 1999.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Avenue, NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT: Toby Milgrom Levin or Sydney M. 
Knight, FTC/S-4002, 601 Pennsylvania Avenue, NW., Washington, DC 20580, 
(202) 326-3156 or (202) 326-2162.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46, and Section 2.34 of 
the Commission's Rules of Practice, 16 CFR 2.34, notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of sixty (60) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for May 6, 1999), on the World Wide Web, at ``http://www.ftc.gov/os/
actions97.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Avenue, NW., 
Washington, DC 20580. Two paper copies of each comment should be filed, 
and should be accompanied, if possible, by a 3\1/2\ inch diskette 
containing an electronic copy of the comment. Such comments or views 
will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Section 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii).

Analysis of Proposed Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from Liberty 
Financial Companies, Inc. (``Liberty Financial''), the operator of a 
website on the World Wide Web located at http://www.younginvestor.com 
(``website'').
    The proposed consent order has been placed on the public record for 
sixty (60) days for reception of comments by interested persons. 
Comments received during this period will become part of the public 
record. After sixty (60) days, the Commission will again review the 
agreement and the comments received and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    The Liberty Financial website features several different areas 
targeted to children and teens. One such area is the Measure Up Survey 
area. Participants in this area survey fill out a survey seeking 
financial information, including the individual's: weekly amount of 
allowance; types of financial gifts received such as stocks, bonds and 
mutual funds, and from whom; spending habits; part time work history; 
plans for college; and family finances. Later, the survey elicits the 
individual's name, address, age and email address.
    The Commission's complaint alleges that Liberty Financial made 
three misrepresentations in connection with its collection of this 
information on its website. First, the complaint alleges that Liberty 
Financial represented that the information collected would be ``totally 
anonymous.''' In fact, according to the complaint, all of the 
information collected in the survey area--the questionnnaire responses 
and the participants' personal information--are maintained in one 
database in identifiable form. Thus, the financial information 
participants provide can be linked to them personally.
    The complaint also alleges that Liberty Financial falsely 
represented that participants in the Measure Up Survey who submit the 
requested personal identifying information will receive the company's 
Young Investor e-mail newsletter. In fact, according to the complaint, 
Liberty Financial did not provide a newsletter to any of the 
participants in the Survey.
    Finally, the complaint alleges that Liberty Financial falsely 
represented that every three months, a participant in the Measure Up 
Survey who submits the requested personal information is selected to 
win his or her choice of certain specified prizes. In fact, according 
to the complaint, Liberty Financial has not selected quarterly winners 
as represented.
    The proposed consent order contains provisions designed to remedy 
the

[[Page 29032]]

violations charged and to prevent the respondent from engaging in 
similar acts and practices in the future.
    Part I of the proposed order prohibits Liberty Financial from 
making any misrepresentation about its collection or use of personal 
information from children under the age of eighteen, the group from 
whom Liberty Financial had previously collected such information. The 
order defines ``personal information'' as ``individually identifiable 
information about an individual collected online, including first and 
last name, home or other physical address including street name and 
name of a city or town, e-mail, address, telephone number, Social 
Security number, or any information concerning the child or the parents 
of that child that the website collects online from the child and 
combines with an identifier described in this definition.''
    Part II of the proposed order prohibits Liberty Financial from 
collecting personal identifying information from any child under age 
thirteen if Liberty Financial has actual knowledge that the child does 
not have a parent's permission to provide the information.
    Part III of the proposed order requires Liberty Financial to post a 
clear and prominent privacy statement on its child-directed websites 
explaining Liberty Financial's practices with regard to its collection 
and use of personal identifying information. The notice must include 
the following:
    (a) What information is being collected;
    (b) How Liberty Financial uses such information;
    (c) Liberty Financial's disclosure practices for such information; 
and
    (d) How the consumer can obtain access to the information.
    Liberty Financial may comply with this Part by posting a Privacy 
Notice on its home page along with a clear and prominent hyperlink to 
that notice at each location on the site at which personal identifying 
information is collected. The hyperlink would be accompanied by the 
following statement:

    Notice: We collect personal information on this site: To learn 
more about how we use your information click here.

    Part IV of the proposed order sets forth the principles of parental 
choice and control. This Part requires Liberty Financial to implement a 
procedure to obtain ``verifiable parental consent'' prior to collecting 
and using children's identifying information, a procedure commonly 
referred to as ``opt-in.'' The order specifies ways in which Liberty 
Financial can ensure that parents receive notice of the collection and 
authorize it.
    Part V addresses the information that Liberty Financial previously 
collected from children. It requires Liberty Financial to delete all 
personal information collected from children prior to the effective 
date of the order.
    Part VI of the order states that once the Children's Online Privacy 
Protection Act of 1998 and any regulations implementing the statute 
become effective, Liberty Financial's compliance with that Act and 
regulations will be considered compliance with Paragraphs II through IV 
of the order.
    Part VII outlines Liberty Financial's recordkeeping requirements 
under the proposed order. Part VIII requires Liberty Financial to 
deliver a copy of the order to certain company officers and personnel. 
Parts IX and X require Liberty Financial to notify the Commission of 
any change in its corporate structure that might affect compliance with 
the order; and to file compliance reports with the Commission. Part XI 
is a ``sunset'' provision, dictating that the order will terminate in 
twenty years absent certain circumstances.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 99-13612 Filed 5-27-99; 8:45 am]
BILLING CODE 6750-01-M