In re Liberty Financial

Citation: In re Liberty Financial Companies, Case No. 9823522 (May 6, 1999).

Factual Background
According to the complaint, Liberty Financial was a large asset management company based in Boston, Massachusetts. It provided various fixed and variable annuities as well as management of private and institutional accounts in addition to mutual funds. Liberty Financial's Young Investor website states that it was "a place to learn about money and maybe even earn some too."

The Young Investor website featured several different areas that appealed to children by, for example, using contests and prizes. According to the Federal Trade Commission, at one such area, the Measure Up Survey area, children were invited to provide financial information including the child's: weekly amount of allowance; types of financial gifts received such as stocks, bonds and mutual funds; spending habits; part time work history; plans for college; and family finances. In addition, the site asked for personal identifying information such as name, address, age and e-mail address in connection with providing the children with an e-mail newsletter and eligibility to receive prizes. At the beginning of the survey, Liberty Financial expressly stated that, "All of your answers will be totally anonymous," the FTC said.

FTC Complaint
According to the FTC's complaint, Liberty Financial did not maintain the information it collected at the Measure Up Survey area anonymously because Liberty Financial could identify individuals with their responses to the survey. In addition, the complaint alleged that Liberty Financial did not send Measure Up Survey participants the company's Young Investor e-mail newsletter as promised.

Finally, the complaint alleges that the website falsely represented that every three months, a participant in the Measure Up Survey who submitted the personal information would be selected to win his or her choice of certain prizes. The [FTC]] alleged, however, that the company had not selected winners for the prizes as represented.

Consent Order
The Commission settled with the company. The consent order prohibited Liberty Financial from making any false statements about the collection or use of "personal information" from children under the age of eighteen.

In addition, for children under 13, the order prohibited Liberty Financial from collecting "personal information" if Liberty Financial has actual knowledge that the child did not have a parent's permission to provide the information.

Liberty Financial was also required to post a clear and prominent privacy notice on its websites directed to children under 13 explaining Liberty Financial's practices with regard to its collection and use of "personal information." The notice must disclose: what information is collected, its intended uses, to whom it will be disclosed, and the means by which a parent can access and remove the information that has been collected.

The order also required Liberty Financial to obtain "verifiable parental consent" before collecting and using personal identifying information from children under 13. These requirements are consistent with the requirements of the Children's Online Privacy Protection Act of 1998, and the order expressly provides that compliance with that statute, and its implementing regulations, will be deemed compliance with the order.