FTC Acts to Protect Student Data in Proposed Ed-Tech
Bankruptcy Sale
The
potential sale of 20 million student records by ConnectEDU, an ed-tech company
that filed for bankruptcy in April, has prompted the Federal Trade Commission
to step in to protect the student data, the agency announced Friday.
ConnectEDU, a 12-year-old Boston-based
company, provides interactive tools to help K-12 and post-secondary learners
make academic and career decisions. In its privacy policy, ConnectEDU promised
that—prior to any sale of the company—registered users would be notified and
have the ability to delete their personally identifiable data.
Now,
the FTC said that promise appears to be compromised by the potential sale of the company's
assets, includin the student data, to North Atlantic Capital, a Portland,
Me.-based venture capital fund. As a result, the commission—by a vote of
5-0—authorized its consumer protection bureau to write a letter to the
bankruptcy court that will rule on the asset sale.
The
letter indicates that the terms of the sale of the company and its subsidiary
Academic Management Systems Inc. in bankruptcy do not provide consumers the
notice and choice set forth in the privacy policy and could potentially
run afoul of both the FTC Act and the U.S. Bankruptcy Code.
"On
the ConnectEDU website, students have built personal listings of their academic
and personal interests, honors and awards, and work experience; employed resume
builders, test preparation, and financial literacy tools; and engaged with
networks of teachers, mentors, and potential employers," Jessica Rich,
director of the FTC Bureau of Consumer Protection, wrote in the letter.
Rich
indicated that the FTC's concerns would be "greatly diminished" if
ConnectEDU provided users with notice of the sale of their personal
information, and those users were given a chance to remove it, or if the
personal information was destroyed.
The
U.S. Department of Education applauded the move on Friday. "Users of
online educational tools should be able to trust that companies will use their
personal information in accordance with both the companies' stated privacy
policies and applicable federal legal requirements, including the Family
Educational Rights and Privacy Act (commonly known as FERPA)," said Dorie
Nolt, department press officer, in a written statement.
"This
clearly demonstrates the case that the FTC is actively looking to protect
students' privacy, and those companies that don't follow through with privacy
practices might be in the FTC's crosshairs," said Bradley Shear, a
social-media and digital-privacy lawyer based in Bethesda, Md.
ConnectEDU
filed Chapter 11 bankruptcy in April, listing between $10 million and $50
million in liabilities against less than $10 million in assets, according to its
petition. Last July, the company was awarded a grant
worth nearly $500,000
from the Bill & Melinda Gates Foundation to build an innovative technology
platform that would empower students to master Common Core standards for
literacy through an engaging, personalized, and collaborative-learning
experience.
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