By Cindy J. Roth
The Student Marketing Group Inc. of Lynbrook and its nonprofit arm, the Educational Research Center of America Inc., agreed to pay $75,000 to settle the case, in which it was accused of deceptive business practices and other violations of consumer protection laws.
"This court order halts a scheme that duped young people into providing detailed personal information without the knowledge or consent of their parents," said state Attorney General Eliot Spitzer. "This information was then sold to other companies and used for marketing pitches. Our children's privacy should not be violated in order to make a buck."
As a result of the settlement, the Student Marketing Group is barred from disclosing any personal information it gathers for non-educational marketing purposes in New York state unless it provides notice to parents, students and educators prior to distributing the surveys. The company must also destroy records and data banks of all personal information previously collected through surveys from any student under age 13. For students 13 or older, the company is banned from using or selling the information for commercial marketing purposes. The Federal Trade Commission reached a similar settlement with the Student Marketing Group to resolve the federal agency's investigation.
Owners of the Student Marketing Group declined to comment.
Spitzer's office initiated the case against the firm last August, accusing it of tricking teachers into distributing the annual surveys to their students. The surveys were said to help college-bound students gain access to financial aid. In reality, they were a mechanism for collecting personal data that was then sold to telemarketers and other direct-marketing firms.
A key element of the Student Marketing Group's strategy was to enlist the help of teachers in getting their students to supply detailed information about themselves. To achieve this goal, the company established a not-for-profit subsidiary, the Educational Research Center of America, which served as a front to collect the personal information. Companies that then bought the data used it to target sales pitches to children for items such as magazines, music videos, credit cards, clothes, cosmetics and student loans.
Since 1999, the Education Research Center of America has mailed an annual survey funded by the Student Marketing Group to teachers of approximately 14 million students across the nation. The survey has included a cover letter noting that the information obtained through the survey is to be provided to universities and colleges nationwide for financial aid and student scholarship foundations. However, neither the cover letter nor the survey disclosed the Student Marketing Group's intention to use the survey data for other marketing purposes.
