AI Toys Raise Privacy Concerns, US Officials Call for Action on Data Risks

U.S. officials are raising serious concerns about AI-powered toys and their potential threat to children’s privacy, as these increasingly sophisticated devices collect unprecedented amounts of personal data during everyday play.

The Federal Trade Commission (FTC) recently issued a consumer alert highlighting how AI toys—from interactive dolls to educational robots—may gather sensitive information including voice recordings, location data, and behavioral patterns. This data collection often occurs without parents fully understanding its scope or implications.

“These aren’t just toys anymore—they’re sophisticated data collection devices,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Manufacturers need to be transparent about what information they’re gathering from children and how it’s being used or shared.”

The warning comes amid the holiday shopping season, when AI-enabled toys are expected to be among the most popular gifts. Retail analysts project sales of smart toys to exceed $18 billion this year, representing a 24% increase from 2022.

Privacy experts point to several concerning practices in the industry. Many AI toys require companion apps that request extensive permissions on parents’ smartphones. Some devices continuously listen for voice commands, potentially capturing private family conversations. Others track children’s learning patterns or play habits, ostensibly to improve the experience but also creating detailed behavioral profiles.

“Parents should understand that when a toy is listening to their child, that data might be stored on servers beyond their control,” explained Eva Velasquez from the Identity Theft Resource Center. “That information could potentially be vulnerable to breaches or used for purposes beyond just making the toy function.”

The Children’s Online Privacy Protection Act (COPPA) requires companies to obtain parental consent before collecting data from children under 13, but enforcement challenges and technical loopholes have allowed some manufacturers to sidestep full compliance.

Several toy makers have pushed back against the concerns, arguing that their data collection practices are essential for providing personalized experiences. Industry group The Toy Association released a statement emphasizing that member companies “prioritize children’s safety and privacy” and comply with all relevant regulations.

“The integration of AI enhances educational opportunities and creates more engaging play experiences,” said Rebecca Thompson, spokesperson for the association. “Our members implement rigorous safeguards to protect any data that might be collected.”

However, independent security researchers have identified vulnerabilities in several popular AI toys over the past year. In one notable case, researchers at Northwestern University demonstrated how a popular interactive robot could be remotely accessed by unauthorized third parties, potentially exposing children’s conversations and usage patterns.

Congressional leaders are now calling for stronger oversight. Senator Edward Markey, a longtime advocate for children’s privacy, has introduced legislation that would require more stringent security standards and clearer disclosure requirements for connected toys.

“Children’s bedrooms shouldn’t be training grounds for AI algorithms or sources of valuable data for corporations,” Markey said at a recent press conference. “Parents deserve to know exactly what happens when their child interacts with these devices.”

The FTC recommends several precautions for parents considering AI toys. These include researching the manufacturer’s privacy policies, understanding how to delete collected data, disabling unnecessary features like location tracking, and using strong, unique passwords for any companion apps.

Some privacy advocates suggest more drastic measures, such as disconnecting toys from the internet when possible or opting for traditional, non-connected toys altogether.

“The convenience of these toys comes with significant privacy trade-offs,” said Justin Brookman, director of privacy and technology policy at Consumer Reports. “Parents need to weigh whether the enhanced play experience is worth potentially exposing their children’s personal information.”

As AI technology continues advancing, industry observers expect the tension between innovation and privacy concerns to intensify. The current regulatory framework, largely created before the AI revolution, may require significant updates to address the unique challenges posed by increasingly intelligent and connected children’s products.