Websites and Apps Have More COPPA Options

by Wilson Sonsini Goodrich & Rosati
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The Federal Trade Commission (FTC) recently approved an additional method for website operators and mobile application ("app") developers to obtain parental consent to collect identifying information from children. It also updated its "Complying with COPPA: Frequently Asked Questions" (COPPA FAQs) guidance1 to endorse two additional methods of obtaining such consent.

The Children's Online Privacy Protection Act (COPPA) applies to any website, app, or other online service that knowingly collects personal information from children under 13 and to any website, app, or online service that is directed to children and collects personal information from users. "Personal information" includes names, physical or email addresses, geo-location information, telephone numbers, photographs and voice recordings with a child's image or voice, and certain persistent identifiers. COPPA is one of the strictest privacy laws in the United States. The FTC has aggressively enforced the law through the COPPA Rule in an effort to protect children as they use websites, apps, and other online services.2 FTC enforcement actions for alleged COPPA violations can result in significant monetary penalties and FTC oversight of a company's privacy program for up to 20 years.3 Critics of COPPA have argued that difficult compliance requirements and the risk of steep penalties from non-compliance have stifled the market for child-directed websites and apps.

However, the FTC's recent formal acceptance of an additional verifiable parental consent method and recent updates to its COPPA FAQs may make it slightly easier for websites and apps to comply.

COPPA Requirements to Collect Personal Information from Children Under 13. Generally, under COPPA, if a website, app, or online service collects personal information from children under 13, it must:

  1. provide proper notice of its practices with regard to the collection, use, or disclosure of personal information from children on its website and directly to parents, and
  2. obtain verifiable parental consent to the privacy practices of the website, app, or online service.

Parental Consent. Under the COPPA Rule, websites, apps, and online services generally are required to obtain verifiable parental consent before any collection, use, or disclosure of personal information from children.4 Parents must be given the option of agreeing just to the internal collection and use of personal information, or agreeing also to disclosure of such information to third parties. The COPPA Rule states, "An operator must make reasonable efforts to obtain verifiable parental consent, taking into consideration available technology. Any method to obtain verifiable parental consent must be reasonably calculated, in light of available technology, to ensure that the person providing consent is the child's parent."

Methods to Obtain Verifiable Parental Consent. The FTC has prescribed certain methods for obtaining verifiable parental consent that automatically comply with the COPPA Rule, but some websites, apps, and online services have viewed them as too impractical to implement. For example, having a parent return a signed consent form by postal mail, fax, or an electronic scan will suffice, but may be time consuming and burdensome for parents and businesses.

New Methods of Obtaining Verifiable Parental Consent

In a December 23, 2013, response letter, the FTC formally accepted knowledge-based authentication as an additional method for obtaining consent. Then, on July 16, 2014, it updated its COPPA FAQs to clarify some other options that are available for obtaining parental consent.

Knowledge-based Authentication. Imperium, LLC, previously submitted a request to the FTC to approve a parental-consent mechanism not enumerated under the COPPA Rule. The consent method uses knowledge-based authentication by asking "out of wallet" challenge/response questions to parents. Examples include previous addresses, phone numbers, etc. In the FTC's response letter, Imperium received formal approval from the FTC allowing websites, apps, and online services to use such knowledge-based authentication methods to obtain verifiable parental consent.5 The FTC agreed that this method meets the COPPA Rule requirements as long as the method uses (1) dynamic, multiple-choice questions where the probability of correctly guessing the answers is low; and (2) questions difficult enough that children under 13 could not reasonably ascertain the answer.

Credit Card Number Plus. Previously, the FTC had stated that verifiable parental consent could be obtained by collecting a credit card number from a parent and issuing a charge to the card, but that the mere collection of the credit card, without performing a transaction, would not suffice. In its recent COPPA FAQs guidance update, the FTC changed this statement to indicate that a website, app, or online service can use a credit card number without performing a transaction to comply with the COPPA Rule, as long as the website, app, or online service does so in conjunction with implementing other safeguards. As an example, the agency stated that a website, app, or online service "can supplement the request for credit card information with special questions to which only parents would know the answer and find supplemental ways to contact the parent."

App Stores. The FTC's updated guidance explains that app developers may rely on parental consent obtained by an app store as long as the app developer ensures that the app store is complying with COPPA requirements for obtaining parental consent. The FTC cautioned that "the mere entry of an app store account number or password, without other indicia of reliability (e.g., knowledge-based authentication questions or verification of government identification), does not provide sufficient assurance that the person entering the account or password information is the parent, and not the child." It further stated that the app developer also must provide parents with a direct notice outlining its information practices before the parent provides his or her consent to the app store.

Implications

The recent clarity on additional COPPA-compliant methods of obtaining parental consent may help create a more inviting COPPA environment for websites, apps, and online services. However, the risks from non-compliance are real. The substantial civil penalties and long-term FTC monitoring of a business's data practices if found non-compliant can prove extremely burdensome. Therefore, websites, apps, and online services should continue to monitor carefully their COPPA compliance.


1 "Complying with COPPA: Frequently Asked Questions: A Guide for Business and Parents and Small Entity Compliance Guide" (July 2014), available at http://business.ftc.gov/documents/Complying-with-COPPA-Frequently-Asked-Questions.

2 For example, the FTC imposed a $1 million civil penalty against Artist Arena LLC for violations of the COPPA Rule. See http://www.ftc.gov/news-events/press-releases/2012/10/operator-celebrity-fan-websites-pay-1-million-settle-ftc-charges.

3 For example, Artist Arena LLC faces a 10 years of monitoring, see http://www.ftc.gov/sites/default/files/documents/cases/2012/10/121003artistarenadecree.pdf; and RockYou, Inc. faces 20 years of monitoring, see http://www.ftc.gov/sites/default/files/documents/cases/2012/03/120327rockyouorder.pdf.

4 The FTC also clarified in the COPPA FAQs that prior parental consent is not required in certain situations, such as when collecting a name and or contact information for the purposes of obtaining parental consent.

5 See the letter containing the FTC's approval of the method at http://www.ftc.gov/sites/default/files/attachments/press-releases/ftc-grants-approval-new-coppa-verifiable-parental-consent-method/131223imperiumcoppa-app.pdf.

Written by:

Wilson Sonsini Goodrich & Rosati
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