FTC Strengthens Laws To Protect Children’s Privacy

by Pepper Hamilton LLP
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On December 19, 2012, the Federal Trade Commission (FTC) made major changes to the Children’s Online Privacy Protection Act (COPPA) for the first time in nearly 15 years, by significantly amending the Children’s Online Privacy Protection Rule (the Rule). Since COPPA was enacted in 1998, online technology has changed tremendously, with the introduction of smartphones, tablets, apps and social media. The law governing children’s online privacy, however, has largely remained the same until the FTC’s recent announcement.

The amendments to the Rule are intended to strengthen children’s privacy protections and give parents greater control over the personal information that Web sites and online services may collect from children under 13 years of age. The amended rule modifies the definitions of operator, personal information, and Web site or online service directed to children and updates the requirements for notice, obtaining parental consent, insuring confidentiality and security, and providing safe harbors for businesses that operate in the online space. The amended rule also adds a new provision addressing data retention and deletion. As a result of these broad revisions, corporations impacted by these amendments will run the gamut, from large multinational conglomerates to solo app developers.

Background

The COPPA Rule, 16 CFR Part 312, issued pursuant to the Children’s Online Privacy Protection Act of 1998, 15 U.S.C. 6501 et seq., became effective on April 21, 2000. The Rule imposes certain requirements on operators of Web sites and online services directed to children under 13 years of age, and on operators of other Web sites and online services that have actual knowledge that they are collecting personal information online from a child under 13 years of age. Among other things, the Rule requires that operators provide notice to parents and obtain verifiable parental consent prior to collecting, using, or disclosing personal information from children under 13 years of age.1 The Rule also requires such operators to keep secure the information they collect from children, and prohibits them from conditioning children’s participation in activities on the collection of more personal information than is reasonably necessary to participate in such activities.2 Additionally, the Rule contains a “safe harbor” provision enabling industry groups or others to submit to the FTC for approval self-regulatory guidelines that would implement the Rule’s protections.3

Amendments

The FTC initiated a review of the COPPA Rule in April 2010 to ensure that the Rule keeps up with evolving technology and changes in the way children use and access the Internet, including the increased use of mobile devices and social networking. The amendments to the Rule are therefore intended to ensure that COPPA continues to meet its originally stated goals to minimize the collection of personal information from children and create a safer, more secure online experience for them, even as online technologies, and children’s uses of such technologies, evolve.4

According to the FTC, the amendments:

  • modify the list of “personal information” that cannot be collected without parental notice and consent, clarifying that this category includes geolocation information, photographs, and videos
  • offer companies a streamlined, voluntary and transparent approval process for new ways of getting parental consent
  • close a loophole that allowed kid-directed apps and Web sites to permit third parties to collect personal information from children through plug-ins without parental notice and consent
  • extend coverage in some of those cases so that the third parties doing the additional collection also have to comply with COPPA
  • extend the COPPA Rule to cover persistent identifiers that can recognize users over time and across different Web sites or online services, such as IP addresses and mobile device IDs
  • strengthen data security protections by requiring that covered Web site operators and online service providers take reasonable steps to release children’s personal information only to companies that are capable of keeping it secure and confidential
  • require that covered Web site operators adopt reasonable procedures for data retention and deletion, and
  • strengthen the FTC’s oversight of self-regulatory safe harbor programs.5

Impact

Perhaps the most notable amendment is the requirement that online operators must obtain parental consent before collecting a child’s photographs, videos and geolocational information. Recently, the social media and online gaming industries have developed programs intended to increase the ease with which users can share these kinds of information. Companies in these industries in particular will undoubtedly be impacted by the amendments and would be well advised to take proper steps to ensure that they are compliant with the amended Rule.

The FTC also closed a loophole that was exacerbated by newer technologies; COPPA now provides that operators whose products are aimed at children are responsible for ensuring that third-party services, such as plug-ins like Facebook and Twitter as well as ad networks, comply with the COPPA standards. Thus, a third-party service provider who has actual knowledge that it is collecting information through a child-directed Web site should take steps to determine whether it must obtain parental consent before collecting any such data from a child under 13.

Also notable, especially for companies who maintain search engines, is the amendment that extends the Rule to cover persistent identifiers that can recognize users over time and across different Web sites or online services. For example, under the amended Rule, companies will be required to obtain parental consent before using cookies – a prominent tracking tool that uses IP addresses or mobile device IDs to follow the web activity of a user across multiple interfaces – to track the web activity of a child under 13.

Helpful Tips

While the implications of the amendments to the Rule are numerous, many of the potential pitfalls can be avoided through proper acquisition of parental consent and/or implementation of a self-regulatory safe harbor program. To aid in this effort, the amendments add several new methods through which operators can obtain the requisite parental consent, including: electronic scans of signed parental consent forms; video-conferencing; use of government-issued identification; and alternative payment systems, such as debit cards and electronic payment systems, provided they meet certain criteria. Additionally, for companies that collect personal information only for internal use, the FTC has retained the “e-mail plus” option, through which an operator may obtain parental consent via e-mail, as long as the operator confirms the consent by sending a delayed e-mail confirmation to the parent. Additionally, operators participating in a FTC-approved safe-harbor program may use any consent method approved by the program. The practical implementation of the amendments will require balancing the privacy/security interests of children with a user-friendly online experience.

The final amended Rule will be published in a notice in the Federal Register. The amendments to the final Rule will go into effect on July 1, 2013. Attorneys in Pepper Hamilton’s Privacy, Security and Data Protection Practice Group have the skills and practical experience needed to counsel businesses on the COPPA Rule, compliance with state and federal privacy laws and responses to security breaches.

Endnotes

1 See 16 CFR 312.3.

2 See 16 CFR 312.7 and 312.8.

3 See 16 CFR 312.10.

4 See FTC memorandum regarding the amendments at http://ftc.gov/os/2012/12/121219copparulefrn.pdf.

5 See FTC Press Release at http://www.ftc.gov/opa/2012/12/coppa.shtm.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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