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

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