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by Julekha Dash

(IDG) -- Several companies that run youth-oriented Web sites, including Yahoo Inc., The Walt Disney Co. and Toysmart.com, expressed support this week for new federal guidelines aimed at protecting children's privacy online. The president of a company that produces computer game Web sites, however, voiced concerns about how the rules will be enforced at the individual level.

The U.S. Federal Trade Commission Wednesday released rules sites must follow (see "FTC issues child-privacy Web rules," link below) to comply with the Children's Online Privacy Protection Act (COPPA), passed last year by Congress. By next April, companies that collect information on their Web site from children under 13 will need to obtain parental consent before they can disclose that information to third parties or make it publicly available. The rule allows companies to accept parental response via fax, postal mail, a toll-free number or e-mail with a password or digital signature. The FTC has imposed less stringent requirements -- a "sliding scale" -- for Web sites that plan to use the information only internally.

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Web site operators must also make explicit what they do with the information they collect from children under 13. Penalties for noncompliance could be a fine up to $11,000 per violation, the FTC said.

Some companies have been preparing for the ruling for some time now. Catherine Davis, producer of Yahoo's site for kids, Yahooligans, said the company stopped collecting personal information about its child visitors 18 month to two years ago. For example, children don't have to register or reveal data about themselves to play Yahooligan games. Instead, they choose from a list of preselected screen names, Davis said.

"We knew something [from the FTC] was coming down the pike," she said. Yahoo was one of the companies that worked with the FTC to formulate the rules.

Mark Reese, chief e-commerce officer at Toysmart.com, an online toy retailer in Waltham, Mass., said that such child-friendly policies may actually inspire confidence among parents concerned about their children's privacy. Thus, he views the FTC rulings as favorable to youth-oriented Web businesses. Disney, which funds Toysmart, also said it supports the FTC rulings in a statement released yesterday.

The new rules shouldn't cause chaos in the online kids' market because most major children's sites already work to protect privacy, said an analyst at Jupiter Communications LLC in New York.

"If you are Disney or Nickelodeon, you understand [the] kids' market and that if you don't protect it, you're going to be out of business,'' Anya Sacharow said.

But Angel Munoz, president of Dallas-based NewWorld.Com Inc., said that while the FTC may enforce COPPA at the corporate level, Internet privacy policies will be difficult to monitor at the personal level. Although Munoz describes getting e-mail permission from parents to enter their kids in computer game contests as "no big deal," he fears that tech-savvy kids may find ways to skirt the guidelines.