Consumer Advocacy Groups Say Interactive Toys 'Cayla' and 'i-Que' Lack Protections to Prevent Spying on Children

— -- A group of consumer advocacy groups has accused the makers of interactive toys "Cayla" and "i-Que" of failing to provide protections to prevent spying on young children, according to a complaint filed with the Federal Trade Commission (FTC).

The complaint was jointly filed Tuesday by the Electronic Privacy Information Center (EPIC), the Campaign for a Commercial Free Childhood (CCFC), the Center for Digital Democracy (CDD) and the Consumers Union.

The groups allege in the complaint that talking toys "Cayla" and "i-Que" "record and collect the private conversations of young children without any limitations on collection, use or disclosure of this personal information."

"The toys subject young children to ongoing surveillance and are deployed in homes across the United Sates without any meaningful data protection standards," the groups said in the complaint. "They pose an imminent and immediate threat to the safety and security of children in the United States."

The groups are calling on the FTC to investigate and take action against Genesis Toys, which manufactures "Cayla" and "i-Que," and Nuance Communications, which provides third-party voice recognition software for the toys.

"Cayla" is a doll that can talk and interact with children, and can answer questions when the doll is on-line, according to the toy's website. "i-Que" is a robot that can similarly answer questions when it is on-line, according to its website.

The consumer groups said in the complaint that the information gathered from children through their interactions with the toys is stored in a server "in the cloud," and that information could be sold to the military, intelligence and law enforcement agencies. The consumer groups also expressed concern that those toys could be hacked, allowing a potential hacker to listen to the children through the toys.

Nuance responded to the complaint in a blog post on its website on Tuesday.

"Nuance takes data privacy seriously," the company wrote in the blog post. "We have not received an inquiry from the FTC or any other privacy authority regarding this matter, but will respond appropriately to any official inquiry we may receive."

The company said that after it learned "of the consumer advocacy groups' concerns through media," it validated that it has adhered to its policy "with respect to the voice data collected through the toys referred to in the complaint."

"Our policy is that we don’t use or sell voice data for marketing or advertising purposes," Nuance said. The company added that it "does not share voice data collected from or on behalf of any of our customers with any of our other customers."

Genesis Toys did not respond to ABC News' requests for comment on the complaint.

Here are some of the key issues the consumer groups identified in the complaint:

Inadequate Security Measures Could Allow the Toys to Be Used for Spying

The consumer groups said in the complaint that neither "Cayla" nor "i-Que" are equipped with the adequate security measures needed "to prevent unauthorized Bluetooth pairing."

"Researchers discovered that by connecting one phone to the doll through the insecure Bluetooth connection and calling that phone with a second phone, they were able to both converse with and covertly listen to conversations collected through [the toys]," the groups said in the complaint.

Collected Speech Data Could Be Used by Military, Intelligence and Law Enforcement Agencies

The groups also noted in the complaint that the terms of service for both "Cayla" and "i-Que" state that when you ask a question to the toys' companion apps, this information request is stored on a server "in the cloud."

In addition, according to the complaint, Nuance's privacy policy states that the company uses the collected speech data "to develop, tune, enhance, and improve Nuance services and products." The complaint also notes that Nuance's services include biometric solutions sold to military, intelligence and law enforcement agencies.

The consumer groups allege that this "creates a substantial risk of harm because children may be unfairly targeted by these organizations if their voices are inaccurately matched to recordings obtained by these organizations."

The complaint also notes that Genesis Toys' privacy policies for "Cayla" and "i-Que" state that it permits users to request deletion of personal information the company holds about them, but also says that "we may need to keep that information for legitimate business or legal purposes."

'Deceptive Failure' to Disclose Product Placement

The consumer groups said Genesis Toys "pre-programs" both "Cayla" and "i-Que" with "dozens of phrases endorsing Disney products" and that Genesis "does not disclose this advertising practice."

"This misrepresentation is misleading to users about the commercial nature of these endorsements," the groups write, "particularly ... for young children who have not yet developed the cognitive ability to scrutinize and understand such product placement."

Disney told ABC News in a statement that it "does not have an agreement with Genesis and we were unaware that mentions of our theme parks and films were part of the Cayla doll’s script."

Disney is the parent company of ABC News.

Failure to Obtain Parental Consent Prior to Collecting Children's Voice Recordings and Personal Data

The consumer groups said that Genesis Toys "purports to obtain parental consent to the collection of children's personal information when users download the Cayla and/or i-Que application and agree to the terms of service presented upon first accessing the app."

However, "Genesis makes no effort to verify or ensure that the person providing consent is the parent of a child," the groups said in the complaint.