The company, in an e-mailed statement, firmly maintained that it does not collect any information that violates children's privacy laws.

In September, EPIC, a Washington-based privacy advocacy group, with the Federal Trade Commission (FTC). EPIC claimed that Echometrix was violating the provisions of the Children's Online Privacy Protection Act (COPPA) by collecting personally identifiable information about children and their browsing and online chats.

EPIC claimed that Echometrix used the information to deliver targeted advertising to children and for selling it to third-party marketers. In its complaint, EPIC pointed to a separate service offered by Echometrix called Pulse, which analyzes data gathered from multiple sources including instant messages, blogs and chat rooms. The information is then sold as market research intelligence to marketing firms, the EPIC complaint said.

"Pulse boasts of offering unfiltered online conversations and of having access to the teenage market in real-time by capturing instant message conversations, chat room conversations, and blog posts," EPIC claimed.

The company's marketing promotes "illegal surveillance" of children, EPIC said in its FTC complaint. EPIC further stated that Echometrix' privacy policies were not clearly spelled out and offered no easy way for customers to opt out of such tracking.