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December 26, 2012

FTC Adopts New Amendments to Add to Children’s Online Privacy

By: Ifrah Law

The Federal Trade Commission announced on December 19, 2012, that it has adopted final amendments to the Children’s Online Privacy Protection Act (COPPA) that strengthen privacy protections online and give parents greater control over their children’s personal information. FTC officials said that they updated the rules to keep pace with the increasing use of mobile phones and tablets by children.

COPPA governs how companies must proceed when collecting personal data from children under the age of 13. COPPA details what information a website operator must include in a privacy policy, when and how to seek verifiable parental consent, and the responsibilities that operators have to protect children’s privacy online.

The original rules have not seen significant changes since they went into effect in 2000.  The FTC has been examining possible changes to the COPPA rules since March 2010 and has received hundreds of comments from interested parties through multiple comment periods.

“Congress enacted COPPA in the desktop era and we live in an era of smartphones and mobile marketing,” FTC Chairman Jon Leibowitz said.  “This is a landmark update of a seminal piece of legislation.”

The new rules go into effect on July 1, 2013.  The vote was approved by a 3-1 vote, with one commissioner abstaining. Commissioner Maureen Ohlhaussen voted no on the ground that she believes a core provision of the new rules, extending the statutory definition of “operator” to impose obligations on certain websites or online services that do not collect personal information from children or have access to or control of such information collected by a third party, exceeds the scope of the authority granted by Congress in COPPA.

The new rules significantly increase the types of companies that are required to obtain parental permission before knowingly collecting personal details from children, as well as the types of information that will require parental consent to collect.

Under the new amendments, the FTC said companies must seek permission from parents to collect a child’s photographs, videos, audio files, and geo-location information.

The new rules also expand the definition of personal information to include persistent IDs, such as a unique serial number on a mobile phone or the IP address of a browser, if they are used to show a child behavior-based ads.  It requires third parties such as advertising networks and social media networks that know they are operating on children’s sites to notify and obtain consent from parents before collecting personal information.  Additionally, the rule makes children’s sites responsible for notifying parents about data collection by third parties that are integrated into their services.

The FTC said that the new amendments will now require apps and websites that are targeted at children with third-party plug-ins to websites such as Twitter and Facebook, to require parental consent to collect personal information.  Those third parties must obtain parental consent when they have “actual knowledge” that they are collecting information from a website or service targeted at children.

In a departure from the rule changes that were proposed by the government in August, the FTC explicitly exempted app stores, such as those run by Google and Apple, from responsibility for privacy violations by games and software sold in their stores.  The government also reversed a prior proposal by agreeing to continue to allow parental consent to be obtained by email as long as apps and websites only collect the data for internal usage.

Now that these new guidelines have been issued, all operators need to review their policies to ensure compliance. These revisions have significantly expanded the type of information that is considered private and the number of companies that will need to comply. The FTC has previously brought enforcement actions against companies that were in violation of COPPA in the past, and these new rules will allow for more actions to be brought in the future.