Company Assessed Fine For Renting Out Customer Data
On 7/7/2004 the FTC took action against a company for changing their privacy practices materially without informing their consumers.

The company that makes Hooked on Phonics learning systems settled a FTC complaint that they rented out customer data to outside marketers (third parties) after telling customers they would keep the information private. The FTC said that Gateway Learning Corporation provided marketers with information that included personally identifying information (names, addresses, phone numbers and children ages and sexes) of families who bought their program which is primarily used to help children learn to read.

The complaint alleged that the company’s website privacy policy promised to not "sell, rent or loan any personally identifiable information regarding our consumers with any third party unless we receive a customer’s explicit consent."

The case was caused by a July 2003 Washington Post story identifying Gateway as one of many companies renting or selling customer data in violation of their privacy policies. Gateway rented the information for $95 per 100 names. After inquiries from the Post, the company changed its privacy policy to allow data to be shared with third parties. The FTC said it was an unfair practice to change their policy without telling customers first and giving them a chance to remove their data.

The company agreed to pay a $4,600 fine which is that amount it earned by leasing the data. The company released a statement saying it was happy to have the matter resolved and that the current privacy policy is not an issue.