New York Attorney General Andrew Cuomo recently settled with Echometrix, the maker of software that allowed parents to monitor their children’s activity on the Web.

In 2009, Echometrix launched “Pulse,” a parental Internet monitoring software that allowed adults to keep track of their children’s activity on the Internet. In addition, the monitoring software secretly collected and analyzed portions of children’s private online activities, like posting blogs, sending instant messages, and viewing on social networking sites, the AG’s office said.

Pulse was marketed as a way for third party companies to gain insight into what children privately said about products and services, the AG’s office said, and the company failed to disclose to the parents and guardians who purchased its service that it was collecting and analyzing their children’s online activities for marketing purposes.

The Electronic Privacy Information Center filed a complaint with the Federal Trade Commission last year, making similar allegations. EPIC claimed that New York-based Echometrix’s actions violated the Children’s Online Privacy Protection Act and that the company engaged in unfair and deceptive trade practices regarding the marketing of Pulse services.

The New York settlement requires Echometrix to pay $100,000 and refrain from analyzing or sharing any of the data it has access to. The company no longer offers the Pulse service, which it discontinued when the New York investigation began.

To read the press release on the New York settlement, click here.

Why it matters: The settlement comes during the Federal Trade Commission’s review of COPPA, the law which prohibits Web sites from collecting or disseminating personal information about children under 13 without their parents’ permission. Children’s advocacy groups and parental organizations are seeking expansion of the law and a broader definition of “personal information,” but are butting heads with industry and privacy advocates, who argue that limited Internet access or increased age verification impacts privacy rights and raises First Amendment concerns.