A report from the Children's Commissioner for England has called on internet firms and toy companies to be more transparent in what data they are collecting from children.
It says manufacturers of internet-connected toys and online services aimed at younger users should clearly state on packaging or elsewhere if their products captured information about users.
The report, entitled 'Who Knows What About Me', also calls for schools to begin teaching children about using social media and how their data is collected, as well as urging the Government to consider strengthening data protection legislation.
Children's Commissioner Anne Longfield said: "Children are often shocked to learn just how information and data is collected about them as they grow up, from the information stored by new gadgets like Alexa to data held by their schools.
"We need to make sure that they can make informed choices about the data they are giving away and that their parents know who knows what about their kids. The Government must urgently refine data protection legislation if GDPR does not prove up to the job."
The report suggests many parents and children are not fully aware of how much information is being shared across online services and devices, on parents' social media profiles as well as through internet-connected toys.
Concerns have been raised over the security of some connected toys - last year it was discovered voice recordings from one line of toys were being stored online unprotected.
"I also want to see all manufacturers and the big internet companies be transparent about how their devices are capturing information about children, toy manufacturers clearly labelling their packaging if they are capturing children's audio or video and a statutory duty of care between the social media giants and their younger users," Ms Longfield said.
"This is an issue that will only grow as technology continues to advance and it is vital that protections are put in place by the Government so that any data collected about children is done transparently and is used only for positive reasons."
The report says the digital footprints of children are getting bigger as technology becomes an increasing part of daily life.
It suggests that children aged 11 to 16 post to social media on average 26 times a day - meaning as many as 70,000 posts about themselves online by the time they turn 18.
It also argues that even children too young to be online are being exposed to data collection by connected toys that capture audio or video.
In response to the report, the British Toy and Hobby Association (BTHA) said its members were committed to data protection.
"The British Toy and Hobby Association (BTHA) and its members consider the safety and protection of children of paramount importance when designing and manufacturing toys," it said.
"Whilst it is estimated that only 1-2% of the UK toy industry consists of connected toys, the BTHA's members limit the amount of personal data collected, using closed loop systems where possible. When data is collected, this is done to enhance the play experience, for example remembering the level of the game the child has reached and is collected lawfully and safely.
"The BTHA is a key supporter of Media Smart, which is a media literacy programme for 7-16-year olds and provides free educational materials for schools and youth organisations, parents and guardians.
"With the backing of the BTHA, Media Smart are currently producing a free educational resource around data protection and privacy targeted at 9 to 11-year-olds in primary schools, which will launch next Easter.
"Furthermore, the BTHA released a connected toy guide to all its members in 2017 on best practices and engages with the ICO and the Government's cybersecurity team on data and security measures."
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