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Educational Research Center Settles Privacy Suit

Nonprofit sold data on students to commercial marketers

October 31, 2008
The Educational Research Center of America, a non-profit group in New Jersey that hands out scholarships to college students, has been doing a little more than that over the years. The organization has been collecting information about students and selling it to marketers.

ERCA has entered into a consent agreement with 36 states, pledging to tighten up its practices for obtaining and handling personal information it collects from high school student surveys.

"ERCA surveys ask high school and junior high students to provide information such as their ethnic background, honors won, participation in sports and extracurricular activities, as well as the religious affiliation of a college they might choose," said Iowa Attorney General Tom Miller. "The student information was then provided to colleges and other educational institutions, but also marketed to commercial businesses."

The commercial use of the information was disclosed to educators and students, but how to opt out of the marketing was not disclosed to students or to their parents. The ERCA now displays that information in a prominent location.

In addition, ERCA offered educators $40 and $50 gift cards from companies including Staples, VISA, and Office Max in an attempt to entice educators to have their students complete surveys, the states said, and ERCA received hundreds of thousands of surveys completed by students.

Under the agreement with the states, ERCA must clearly disclose how students or parents of students under 18 can opt out of students completing the survey. The agreement also prohibits ERCA from offering anything of monetary value to educators relating to the collection of personal information from students. Changes in these practices are especially important, Miller said, because information gathered by ERCA from students sometimes is sold for commercial marketing purposes.

ERCA is a not-for-profit corporation with headquarters in Morristown, NJ. The company did not admit any violations of state consumer protection statutes. As part of the "Assurance of Discontinuance / Assurance of Voluntary Compliance," ERCA also will pay $200,000 to the states for investigative costs, attorney fees, and consumer education and litigation.

The states participating in the settlement include Alabama, Alaska, Arizona, Connecticut, Delaware, Hawaii, Illinois, Indiana, Iowa, Louisiana, Maine, Maryland, Michigan, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, Wyoming, and the District of Columbia.

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