United States: FTC Finalizes Amendments To Children's Online Privacy Protection Rule

Last Updated: January 24 2013
Article by Barry M. Benjamin and Jeremy A. Schachter

The Federal Trade Commission announced its final amendments to the Children's Online Privacy Protection Rule ("COPPA Rule" or the "Rule") on December 19, 2012. The Rule is designed to prevent data collection from children under the age of 13 for marketing purposes without parental consent, and the changes will go into effect on July 1, 2013. The amendments came after nearly two years of reflection on the Rule, which included a public roundtable, several rounds of public comment and two previous iterations of proposed amendments. 

The final Rule is arguably less restrictive than previous proposed versions suggested it might be. Nevertheless, the Rule is much broader in scope and extends to data collection practices and entities that were not previously subject to COPPA. Overall, the amendments result in a number of significant changes to the Rule. To summarize, the changes affect the following: 

    (1) What it means for a site or service to be directed to children;

    (2) The standards for establishing operator and third party liability;

    (3) What constitutes personal information;

    (4) Parental notification and consent requirements; and

    (5) FTC oversight.

1. Sites or Services Directed to Children

The definition of what constitutes a site or service directed at children will remain largely the same, using the "totality of the circumstances" test. The final Rule does, though, add two enumerated factors. The totality of the circumstances test is used to determine whether a site or service is directed at children and whether a site or service targets children as its primary audience. The additional factors are (i) music, as an element of audio content and (ii) presence of child celebrities who appeal to children. The enumerated factors, however, will remain a non-exhaustive list, and no factor is to be given any more weight than another. Thus, the additional factors would have likely been relevant even without the change.

The final Rule also provides a safe harbor of sorts to sites or services that are directed at children but do not target children as the primary audience, such as family websites that appeal to an audience of all ages, but do contain child-oriented content. Whereas sites or services that are directed to children and target children as the primary audience must treat every user as a child and apply COPPA restrictions to all, sites or services that are "directed at children" but do not "target" children need not. Rather, these sites or services are given the option to age-screen their users and apply COPPA protections only to those users who self-identify as under 13. 

2. Operator/Third Party Liability

The new Rule revised its definition of "operator" to state that "[p]ersonal information is collected or maintained on behalf of an operator when: (a) it is collected or maintained by an agent or service provider of the operator; or (b) the operator benefits by allowing another person to collect personal information directly from users of such operator's website or online service." This means that sites or services that collect or allow third parties to collect personal information (such as ad networks or social plugins) are operators and must comply with parental notice and consent requirements. Additionally, third parties that collect personal information with actual knowledge that the site or service is directed at children are also subject to COPPA. The actual knowledge standard is lower than the constructive knowledge standard that the FTC previously considered. Finally, the FTC shielded platforms from incurring any operator liability where they only offer access to other parties' applications. Platforms include mobile application providers such as Google Play or Apple's APP STORE mobile download service.

3. Personal Information

Sites or services subject to the COPPA Rule may not collect the personal information of children under the age of 13 without first notifying parents and obtaining parental consent. The revised Rule states that such personal information consists of:

  • Persistent Identifiers - The final Rule defines any persistent identifier as "personal information," and it defines a persistent identifier as anything used to recognize a user over time and across different websites or online services (e.g. an IP address, a user number stored in a cookie, a processor/device serial number or a unique device identifier). Note, though, that persistent identifiers may be collected without parental notice and consent where it is used only to support the website or service's internal operations (i.e. contextual advertising, frequency capping, legal compliance, site analysis and network communications); 
  • Online Contact Information - Email addresses or other identifiers that permit direct contact with a person online;
  • Screen or User Names - Functions in the same manner as online contact information and covers direct, private, user-to-user contact; 
  • Photo, Audio and Video Files - Considered personal information where it contains a child's image or voice; and
  • Geo-location Information - Considered personal information where it is sufficient to identify both street name and city/town name.

The new Rule does not expand personal information to include full zip code plus 4 data or date of birth combined with gender and zip code. The Rule also provides a method for seeking FTC approval to add more activities to the list of internal operations for which persistent identifiers can be collected without parental notification and consent. Any collection of persistent identifiers for contacting individuals directly or through behavioral advertising, or creating profiles on individuals, however, requires parental notification and consent.

Further, what it means to collect personal information has been expanded. Collection includes "prompting" or "encouraging" the submission of information and even the "passive tracking" of information. Nevertheless, collection will not be deemed to have occurred where operators take reasonable measures to delete all or virtually all children's personal information before it is made public. This is a change from the current Rule's 100 percent deletion standard.

Additionally, where operators do decide to make use of children's personal information and comply with the notification and consent requirements, they may only retain the information so long as is necessary to fulfill the purpose of collection in the first place. The information must subsequently be deleted. Moreover, operators must secure the information and protect against unauthorized access or use while the information is being disposed of. Finally, operators must also take reasonable steps to ensure that the personal information is released only to those capable of providing the same security required of the operator.

4. Parental Notification and Consent

The Rule expands on the parental notice requirement, requiring that parents be notified of an operator's data collection practices in two ways. First, the privacy policy must be available directly on the site or service. The Rule includes requirements for the content and placement of the notice. Second, parents must be provided with a direct notice. The direct notice must explain to parents what personal information has already been collected from the child, the purpose of the notification, what actions the parent can take and how the collected information will be used. Importantly, merely providing a link to the privacy policy is not sufficient; this information must be conveyed in the direct notice.

In addition to notification, the Rule requires that operators obtain verifiable parental consent before collecting personal information from children. The "email plus" method for obtaining parental consent is retained on a limited basis, that is, when children's personal information is used for internal purposes only. However, the Rule also provides additional methods of obtaining consent such as electronic scans of signed forms, video verification methods, checking a parent's government identification and certain online payment systems. To allow for more consent processes to be added over time, the Rule establishes a voluntary commission with the authority to approve new parental consent methods.

5. Self-Regulatory Safe Harbor Programs

The final Rule creates expanded oversight over approved safe harbor programs. This oversight includes annual audits of participants and FTC reporting requirements. Participants in the safe harbor programs are likely to face higher compliance burdens and higher levels of government scrutiny. Indeed, the scrutiny of the safe harbor process could very well undermine one of the prior benefits of safe harbor participation.

What this means to you

The final COPPA Rule contains significant changes that deserve a thorough analysis, to determine whether your site or service now comes within the purview of the Rule and, if so, what steps must be taken toward compliance. You can be confident that the FTC, after the long, arduous road of revision and issuance of the revised, final Rule, is now actively looking for test cases for enforcement proceedings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Barry M. Benjamin
Jeremy A. Schachter
 
In association with
Related Video
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert
Email Address
Company Name
Password
Confirm Password
Mondaq Topics -- Select your Interests
Accounting and Audit
Anti-trust/Competition Law
Consumer Protection
Corporate/Commercial Law
Criminal Law
Employment and HR
Energy and Natural Resources
Environment
Family and Matrimonial
Finance and Banking
Food, Drugs, Healthcare, Life Sciences
Government, Public Sector
Immigration
Insolvency/Bankruptcy, Re-structuring
Insurance
Intellectual Property
International Law
Litigation, Mediation & Arbitration
Media, Telecoms, IT, Entertainment
Privacy
Real Estate and Construction
Strategy
Tax
Transport
Wealth Management
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.