LITIGATION

Toysmart Settles With FTC TOYSMART'S SETTLEMENT with the Federal Trade Commission forbids the sale of the failed online toy retailer's customer information except under very limited circumstances. According to the agreement reached last month, Toysmart will only be allowed to sell its customer list bundled with its Web site, and only to a buyer in a related field that agrees to abide by Toysmart's original privacy agreement. In addition to the settlement, the FTC filed a complaint in U.S. District Court in Massachusetts alleging that Toysmart is in violation of the Children's Online Privacy Protection Act. COPPA prohibits collection of personal information from children under the age of 12 without parental consent. At its Web site, Waltham, MA-based Toysmart collected detailed personal information about its visitors including childrens' names and birth dates. Its posted privacy statement guaranteed that it would "never" share personal information collected on its site. In June, Toysmart filed for Chapter 11 bankruptcy protection and listed its customer file as an asset for sale in a Wall Street Journal advertisement. The site attracted 1.6 million visitors in December 1999. The FTC ruling followed actions taken by 39 states and territories that went to court to prevent Toysmart from selling its customer list as part of its bankruptcy proceedings.