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Financial Services Law Insights and Observations

FTC settles with app developer for COPPA violations

Privacy/Cyber Risk & Data Security FTC Enforcement COPPA Courts

Privacy, Cyber Risk & Data Security

On June 4, the FTC announced that a children’s mobile application developer agreed to pay $150,000 and to delete the personal information it allegedly unlawfully collected from children under the age of 13 to resolve allegations that the developer violated the Children’s Online Privacy Protection Act Rule (COPPA Rule). According to the complaint filed in the U.S. District Court for the Northern District of California, the developer, without notifying parents or obtaining verifiable parental consent, allowed third-party advertising networks to use persistent identifiers to track users of the child-directed apps in order to send targeted advertisements to the children. The proposed settlement requires the developer to destroy any personal data collected from children under 13 and notify and obtain verifiable consent from parents for any child-directed app or website they offer that collects personal information from children under 13. A $4 million penalty is suspended upon the payment of $150,000 due to the developer’s inability to pay.

In dissent, Commissioner Phillips argued that the fine imposed against the developer was too high, noting that having children view advertisements based on the collection of persistent identifiers “is something; but it is not everything,” under COPPA. Commissioner Phillips argued that because the developer did not “share[] sensitive personal information about children, or publicize[] it” nor did the developer expose children “to unauthorized contact from strangers, or otherwise put [the children] in danger,” the assessed penalty was too large in comparison to the harm.

In response to the dissent, Chairman Simons argued that while “harm is an important factor to consider…[the FTC’s] first priority is to use [] penalties to deter [] practices. Even in the absence of demonstrable money harm, Congress has said that these law violations merit the imposition of civil penalties.”

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