FTC Settles COPPA Violation Charges With Two App Developers | Practical Law

FTC Settles COPPA Violation Charges With Two App Developers | Practical Law

The FTC has announced it reached a settlement with two mobile app developers, settling charges that both companies violated the Children’s Online Privacy Protection Act (COPPA) by allowing advertisers to use persistent identifiers to serve advertising to children without parental knowledge or consent.

FTC Settles COPPA Violation Charges With Two App Developers

Practical Law Legal Update w-001-0992 (Approx. 3 pages)

FTC Settles COPPA Violation Charges With Two App Developers

by Practical Law Intellectual Property & Technology
Published on 21 Dec 2015 • USA (National/Federal)
The FTC has announced it reached a settlement with two mobile app developers, settling charges that both companies violated the Children’s Online Privacy Protection Act (COPPA) by allowing advertisers to use persistent identifiers to serve advertising to children without parental knowledge or consent.
On December 17, 2015, the FTC issued a press release announcing the settlement of Children's Online Privacy Protection Act (COPPA) violation charges with two mobile application developers, stemming from their alleged use of persistent identifiers to enable targeted advertising. The FTC added persistent identifiers, which consist of any data that can be used to recognize a user over time and across different websites, to the COPPA Rule's definition of personal information in 2013.
The FTC alleged both companies, LAI Systems, LLC, and Retro Dreamer, Corp., violated COPPA by failing to:
  • Notify parents of their information practices.
  • Obtain verifiable parental consent before allowing third-party advertisers, through the use of persistent identifiers on the mobile applications, to collect, use, or disclose personal information from children under 13.
These cases represent the first FTC COPPA Rule enforcement actions based solely on the alleged collection of persistent identifiers without parental notice and consent.
As a result of the settlement, both companies will be prohibited and enjoined from violating COPPA in the future, and in accordance with the requirements of COPPA, will be required to:
  • Make reasonable efforts to notify a child's parent or legal guardian of the company's information practices regarding the collection, use, or disclosure of a child’s personal information.
  • Post a prominent and clearly labeled link to an online notice describing their information practices for children's personal information on the home, landing page, or screen of their website or online service, and at each area of the website or online service where personal information is collected from children.
  • Obtain verifiable parental consent before collecting, using, or disclosing a child’s personal information, including consent to any material change in the collection, use, or disclosure practices to which the parent has previously consented.
Collectively, LAI and Retro will pay a combined $360,000 in civil penalties and the FTC will monitor both companies for future compliance.