The UK’s data watchdog has said that VTech’s new terms and conditions would not absolve it of liability in the case of future hack attacks.
It emerged earlier this week that the toy company had changed its terms to say that families using its software did so at their “own risk”.
This prompted a backlash in which some security experts suggested parents should boycott its products.
The UK’s Toy Retailers Association has since said VTech remains “reputable”.
However, at least two major stores have told the BBC that they are in talks with the Hong Kong-based manufacturer to decide how to proceed.
VTech was alerted to the fact it had been hacked in November when it was contacted by the Motherboard news site.
It later confirmed that more than 6.3 million children’s accounts and 4.8 million parent accounts had been compromised.
Photos, voice messages, and chat conversations between the adults and their children were among the profile data exposed.
The company later hired the security firm FireEye and subsequently restored its Learning Lodge app management platform at the end of last month.
But it caused further controversy when it changed its European terms and conditions to state parents must assume “full responsibility” for using its software.
“You acknowledge and agree that any information you send or receive during your use of the site may not be secure and may be intercepted or later acquired by unauthorised parties,” it added.
“Use of the site and any software or firmware downloaded therefrom is at your own risk.”
The firm told the BBC that the move was intended to help protect itself from legal claims.
“The Learning Lodge terms and conditions, like the T&Cs for many online sites and services, simply recognise that fact by limiting the company’s liability for the acts of third parties such as hackers,” a spokeswoman explained.
“Such limitations are commonplace on the web.”
The terms include the caveat that VTech only absolves itself of responsibility in so far as “applicable laws” allow it to do so.
The Information Commissioner’s Office has confirmed that this would not be possible in the UK.Media captionA press officer interrupted an interview last month when BBC’s Rory Cellan-Jones questioned a VTech manager about the hack
“The law is clear that it is organisations handling people’s personal data that are responsible for keeping that data secure,” said a spokeswoman.
A data protection specialist added that this would be the case for other EU countries too.
“If VTech did suffer another breach, some people might be dissuaded from bringing a claim because of the terms and conditions, or VTech might be trying to give themselves room to argue that they aren’t liable,” said Paul Glass from the law firm Taylor Wessing.
“But under European and UK law the obligation is on the company in control of the data to take appropriate steps to protect the information from unauthorised disclosure or access.
“Even if VTech did try and argue that people were contractually prohibited from bringing a claim, it is a difficult position for the firm to take.”
Two of the UK’s leading retailers told the BBC that they had contacted VTech to discuss its approach.
“The security of our customers’ personal data is of the utmost importance to us,” said Argos.
“We are aware of the story relating to VTech and we are in conversations with them to learn more before taking any action.”
John Lewis added: “We are in active conversations with VTech around this issue and are looking at reviewing how we communicate the use of the Learning Lodge to customers as a result.”
The Toy Retailers Association, which represents much of the trade, was more robust in its defence of the firm.
“VTech are and have been a reputable supplier of toys and [were] subject to an indiscriminate hacker,” said the body’s chairman Alan Simpson.
“Under the circumstances they have and will continue to take all reasonable precautions to protect their customers.
“But like everyone else a hacker does not play by any moral rules.”
‘Vote with your feet’
Some security experts, however, remain critical of VTech’s handling of the breach.
“No company can protect 100% against the possibility of being hacked, but taking sufficient precautions and ensuring a good level of security is maintained should be the fundamentals of any policy where users’ private data is being held,” commented Mark James from the cybersecurity firm Eset.
“To shift ownership over to the users is bad enough in itself but to make it known through walls of text in T&Cs is a bad way to do it – no one honestly reads it, especially a parent trying to set up something for their children.
“Our minors’ data should be ultra-important for any organisation and protecting that should be their number one priority. If voting with your feet is the best way to make them understand, then maybe that’s the right thing to do.”