FTC's Hooked on Phonics case...announced July 7, 2004
Hooked On Phonics and the FTC Enforcement Action
The size of the fine, IMHO, means that the FTC didn't think that HOP acted in bad faith.
This is the first of the "material changes" cases for the FTC on website privacy policies. I expect more as we seek more guidance about what a site cna and can't do.
The best advice I can give you is to tag all data with the privacy limitations and any conditions of use under which that information was collected.
I think the FTC is one of the best governmental agencies in the world. They've done a great job here.