If you are creating a brand through a start-up company, customer lists and feedback are nearly as valuable as your offerings. After all, knowing how your customers think, shop and react to new products are essential to remaining relevant in the marketplace. Suffice it to say, collecting information on customers has become a mainstream practice for businesses across industries.
However, there are correct (and incorrect) ways of obtaining such information. The story of VTech settling a lawsuit with the federal government is an example of the wrong way of doing this. According to a recent businessinsurance.com report, the Hong Kong based electronics retailer found itself served with a lawsuit initiated by the Federal Trade Commission (FTC).
The FTC claimed that VTech collected personal information about child users without gaining verifiable permission from their parents, or without providing users (or their parents) with sufficient notice that it would be collecting such information. The FTC further claims that VTech failed to take adequate steps to protect sensitive information, as evidenced by a 2015 cyber attack that exposed such information.
Conversely, VTech maintains that it provided adequate notice regarding its data collection practices as well as its notices to parents. It also claims that it was always in control of who children could communicate with, so that young users were never in any real danger. Nevertheless, VTech chose to settle with the FTC and pay a $650,000 fine, ostensibly to avoid protracted litigation.
Ultimately, the story is an example of what could go wrong if you do not follow proper data collection and maintenance protocols. An experienced intellectual property attorney can assist in that regard.