January 30, 2001

Commercial Alert Calls Web-Filter Company N2H2 a "Corporate Predator"

FOR IMMEDIATE RELEASE
JANUARY 29, 2001
CONTACT: Commercial Alert
Gary Ruskin (202) 296-2787
www.commercialalert.org

Commercial Alert Calls Web-Filter Company N2H2 a "Corporate Predator" Asks Defense Sec. Rumsfeld Not to Hire N2H2 to Spy on American Schoolchildren

WASHINGTON - January 29 - Following a news report that the Web-filtering company N2H2 Inc. gathers data on children as they surf the Web in school and sells it to marketers and the Defense Department, Commercial Alert director Gary Ruskin called N2H2 a "corporate predator that snoops on schoolchildren for monetary gain." Commercial Alert urged parents, school board members, principals and teachers to rid the schools of N2H2's child-tracking software.

Commercial Alert sent a letter today to Secretary of Defense Donald H. Rumsfeld asking the Defense Department not to hire N2H2 to spy on the Web-browsing of the nation's schoolchildren. The letter said that "During the Clinton Administration, the Defense Department must have grown confused about its mission. It should spy on national security threats, not our own schoolchildren."

On January 26th, The Wall Street Journal reported that N2H2's Bess filtering system "knows where the students go on the Web and how long they spend there....Late last year, N2H2 began selling its data. The information, called Class Clicks, is aggregated, meaning it can't be used to identify surfing habits of specific students, or even specific schools....for $15,000 a year, marketers and Web-site operators can get monthly reports that detail where kids are going on the Internet, along with Roper Starch's aggregate estimates of the kids' ages and races." The Journal noted that, so far, N2H2's only clients for the student marketing data are BigChalk Inc. and the Defense Department.

N2H2 is widely used in the nation's schools. According to the Journal, "Just under half of all schools and libraries use some sort of filtering software, and N2H2 has 20% of this market, according to International Data Corp."

"Schoolchildren should not be for sale, nor should they be pawns in any corporation's marketing plans," Ruskin said. "N2H2 is trying to turn the schools into little market research factories."

"The use of N2H2 software is an abusive extension of government power to enable marketers to spy on unsuspecting schoolchildren," Ruskin said. "N2H2's data gathering and surveillance practices are creepy. It is not the proper role of the public schools to help corporations or the Defense Department to obtain information from vulnerable schoolchildren. School board members, principals and teachers should work together to rid the schools of N2H2's prying software."

Following is today's letter from Commercial Alert to Secretary of Defense Donald H. Rumsfeld.

Dear Secretary Rumsfeld:

Last Friday, the Wall Street Journal reported that the Defense Department is a client of N2H2 Inc., which uses child-tracking software to snoop on the Web-browsing of our nation's schoolchildren, and then sells the data to marketers.

According to the Journal, N2H2's Bess filtering system "knows where the students go on the Web and how long they spend there....Late last year, N2H2 began selling its data. The information, called Class Clicks, is aggregated, meaning it can't be used to identify surfing habits of specific students, or even specific schools....for $15,000 a year, marketers and Web-site operators can get monthly reports that detail where kids are going on the Internet, along with Roper Starch's aggregate estimates of the kids' ages and races."

During the Clinton Administration, the Defense Department must have grown confused about its mission. It should spy on national security threats, not our own schoolchildren. Please straighten this out, and cut all Defense Department ties to N2H2 immediately. Thank you.

Sincerely,

Gary Ruskin, Director, Commercial Alert

<-------letter ends here------->

Following is an article from the January 26 edition of the Wall Street Journal.

Web-Filter Data From Schools Is Put Up for Sale by Company by Jason Anders

Few companies know more about what children do on the Internet at school than N2H2 Inc. The company's Web-filtering software, called Bess, is used by more than 12 million students in kindergarten through 12th grade, and new federal rules are likely to push the number higher.

Because it typically is installed as a school's gatekeeper to the Internet, Bess knows where the students go on the Web and how long they spend there. It also knows when students try to access a site that's on N2H2's blacklist for being too violent or containing pornography.

The question is whether marketers should get to know students' surfing habits, too. Late last year, N2H2 began selling its data. The information, called Class Clicks, is aggregated, meaning it can't be used to identify surfing habits of specific students, or even specific schools. But privacy advocates say the sale of children's usage data is troubling, and they worry that marketers are encroaching on ground that once was sacred.

"Students just should not be contributing to marketing tools and subjected to profiling based on how they are using the educational tools of the Internet," says David Sobel, general counsel at the Electronic Privacy Information Center in Washington.

N2H2 spokesman Allen Goldblatt counters that schools and parents have no reason to be concerned. "This is a real nonissue for us," he says. "This information is so anonymous and vague."

Just under half of all schools and libraries use some sort of filtering software, and N2H2 has about 20% of this market, according to International Data Corp., a research firm. The new Children's Internet Protection Act makes the use of such software a requirement for schools and libraries that want to obtain money from the federal E-rate program, which helps schools get on the Internet.

N2H2 says it began tracking students' Internet activities in late 1999. It figured the data would be useful to teachers and to operators of educational Web sites. Then, in the summer of 2000, it began looking into other uses of the data. It soon began talking with New York marketing firm Roper Starch Worldwide about developing a marketing product the two could sell.

As a result, for $15,000 a year, marketers and Web-site operators can get monthly reports that detail where kids are going on the Internet, along with Roper Starch's aggregate estimates of the kids' ages and races. At its most specific, N2H2 says, the reports group students into one of nine U.S. census districts. The company says there is no way for buyers of the data to figure out who the students are.

Still, it is unclear how many of N2H2's school clients realize that their students' Web activities are part of a marketing product. N2H2 says schools were specifically told that the company was collecting the data in a December 1999 report that was sent to all of the company's educational clients. But the report was written months before N2H2 first met with Roper Starch and it doesn't mention any plans to sell the school traffic data.

Jeff Johnson, who oversees computer operations for the Greendale School District, a former N2H2 client in Greendale, Wis., says he didn't know information was being collected for a marketing program. "That's something I would have a big problem with," he says. "It seems inappropriate." His school stopped using N2H2's software last fall over an unrelated issue.

Kent Guske, technology director for Worth County Schools in Sylvester, Ga., also says he didn't know that N2H2 was selling data. But he considers the marketing effort benign: "I don't really see why it would be a concern if it's just general usage data on where kids are going," he says.

Congress moved to protect children's online privacy with the Children's Onli ne Privacy Protection Act of 1998, or Coppa, which took effect in April 2000. The act was designed, in part, to protect young children from marketing efforts. But privacy advocates argue that it doesn't go far enough and note that it doesn't prohibit the kind of data collection N2H2 is doing. The act, which applies to children younger than 13, prohibits the collection of personal information that can be used to identify someone.

For its part, SurfControl PLC, another maker of filtering software and one of N2H2's competitors, says it doesn't collect data on any of its users' surfing habits and believes it would be inappropriate to do so.

N2H2 acknowledges the company's software, which often is configured to act as a "proxy server," collects a wide range of data, just as the servers of any Internet service provider do. Proxy servers, which act as gateways for Internet traffic, can log a user's Web activities -- including sites visited, pictures viewed and information submitted in forms. N2H2 says it has built in safeguards to make sure that only anonymous aggregate data become part of its marketing effort.

Deborah Pierce, an attorney who specializes in privacy matters for the Electronic Frontier Foundation, says she is troubled by the amount of data collected. "The bottom line is to get this data they're selling they're actually collecting a lot more data on their server logs," she says.

Robert Belair, a privacy attorney with the Washington firm Mullenholz, Brimsek & Belair, says N2H2's data collection complies with Coppa. "From a legal standpoint, it sounds like they're fine. But I always tell my clients that public relations is a different matter," he says.

So far, very few people have seen the data N2H2 is selling. Despite discounting the product to $10,000, Roper Starch has sold the product to only two clients: New York-based education portal BigChalk Inc. and the Defense Department. (N2H2, which went public in July 1999, has yet to report a profit.)

BigChalk purchased the data because it wanted a better idea of how it was stacking up against competitors, says Nan Halperin, vice president of sales and marketing. She says the company wasn't concerned about the way the data were being collected. "I don't think the data [are] being used inappropriately, nor do I think that's a threat," she says.

The Defense Department didn't return telephone calls seeking comment.