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Court denies tech company's second request for COPPA claim dismissal

Courts Privacy/Cyber Risk & Data Security State Issues State Attorney General COPPA

Courts

On February 2, the U.S. District Court for the District of New Mexico granted a technology company’s motion for reconsideration in part, but denied dismissal of the New Mexico attorney general’s action alleging the company designed and marketed mobile gaming applications (apps) targeted towards children that contain illegal tracking software in violation of the Children’s Online Privacy Protection Act (COPPA). As previously covered by InfoBytes, the attorney general filed a lawsuit against a group of technology companies, alleging that the companies’ data collection and sharing practices did not comply with COPPA’s specific notice and consent requirements, while the apps’ embedded software development kits (SDKs) allow the apps to communicate directly with the advertising companies that analyze, store, use, share, and sell the data to other third-parties to build “increasingly-detailed profiles of child users” in order to send highly-targeted advertising. In April 2020, the court denied in part a motion to dismiss by one of the companies, concluding the attorney general plausibly alleged that the company “had actual knowledge of the child-directed nature” of the apps, and under COPPA, “ad networks may be held liable for the collection of personal information from child app users only if they have ‘actual knowledge’ that the apps in which their (SDKs) are embedded are ‘directed to children.’” The company moved for reconsideration, arguing that the court improperly held whether “children were the ‘primary target audience’ of the app was not relevant to the ‘actual knowledge’ determination.”

Upon reconsideration, the court agreed with the company that its April 2020 opinion “misapprehended the significance of the mixed-audience exception to the actual knowledge determination,” but concluded that there is no basis to dismiss the COPPA claim because the attorney general still “adequately alleged actual knowledge on the part of [the company].”

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