Privacy Regulators Take to the Web in Search of Deficient Privacy Policies

by Poyner Spruill LLP

Regulators have historically taken a reactive approach to privacy and information security issues related to websites and mobile apps, often waiting to take action until a potential violation has been brought to their attention. In recent months, they have shifted to an increasingly proactive approach to policing websites and mobile apps. This is an emerging trend at the international, federal, and state levels.

Consider recent activity by the Global Privacy Enforcement Network—an organization comprised of over twenty governmental privacy authorities from across the globe, including the U.S. Federal Trade Commission (FTC), the European Data Protection Supervisor, and the Office of the Privacy Commissioner of Canada. In early May, participating authorities conducted a global “Internet Privacy Sweep” to identify websites and apps under their jurisdiction that “may warrant further assessment or follow-up.” The Sweep focused on the “transparency” of organizations’ online privacy practices, meaning website and mobile app privacy policies were areas of emphasis.

At the federal level, the FTC recently conducted a proactive and unannounced review of websites and apps in order to determine whether they comply with the new rule promulgated by the FTC pursuant to the Children’s Online Privacy Protection Act (COPPA Rule). The new COPPA Rule will take effect on July 1; it includes an expanded definition of personal information and takes a more liberal approach to vicarious liability of website and mobile app operators. Following the FTC assessment of websites and mobile apps, the agency sent “educational letters” to more than ninety businesses. The letters stated that, under the new COPPA Rule, these companies’ websites and apps appear to be directed to children and would therefore be subject to the extensive parental notice and consent obligations imposed by the rule.

State regulators also appear to be taking a more proactive and decidedly less “educational” approach. The California Privacy Enforcement and Protection Unit, which was created about a year ago, has been actively looking for apps that violate California privacy and information security laws. In October of last year, Attorney General Kamala D. Harris notified 100 mobile app providers that she believed their software violated the California Online Privacy Protection Act (Cal-OPPA). About two months later, she sued Delta Airlines, Inc., claiming the company’s mobile app violated Cal-OPPA. Delta recently prevailed on its motion to dismiss at the trial court level, but California Special Assistant Attorney General Travis LeBlanc, whose portfolio includes the agency’s work on technology issues, has stated that the Department of Justice will appeal the ruling and that more enforcement actions are on the horizon in 2013.

Other states are also getting in on the act. For example, the Maryland Attorney General, Douglas F. Gansler, established a special “Internet Privacy Unit” in January. Press releases indicate that the unit will take an active role in monitoring organizations for compliance with COPPA and examining online privacy notices. Enforcement actions are also contemplated. Attorney General Gansler earlier led a thirty-five-state coalition that challenged Google on its controversial privacy policy, which was implemented last year.

These examples show that regulators at all levels of government are stepping up investigations of privacy and information security practices in the absence of actual harm, or even demonstrable risk of harm, to consumers. These regulators may no longer wait for a large-scale security breach before bringing an enforcement action. Statutory damages and civil penalties are available in many cases, even in the absence of harm to consumers, which makes this new approach particularly concerning. In light of these developments, organizations should assess their websites and mobile apps for compliance with international, federal, and state privacy and information security regimes.


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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