Two app developers recently paid a total of $360,000 to settle charges by the Federal Trade Commission ("FTC") that they violated the Children's Online Privacy Protection Act ("COPPA") Rule. The cases make clear that children's privacy online remains an FTC focus. Here's what happened.
The FTC alleged that LAI Systems, LLC and Retro Dreamer had created apps directed to children, including My Pizza Shop, Marley the Talking Dog, and Ice Cream Jump, among others, and allowed third-party advertisers to collect personal information in the form of persistent identifiers. Persistent identifiers are pieces of data tied to a particular user or device. The COPPA Rule expressly includes persistent identifiers in the definition of "personal information." Contrary to COPPA guidance, the companies allowed their advertisers to collect persistent identifiers without providing notice to or getting verifiable consent from the parents for collecting and using the information to serve ads to the children.
The settlement requires LAI Systems, LLC to pay a $60,000 civil penalty, Retro Dreamer to pay a $300,000 civil penalty - and both companies to comply with COPPA in the future. We can't know for certain why FTC fined one company five times as much as the other. But we do note that the Retro Dreamer settlement indicates that the company may have ignored warnings from one of its advertising networks that it needed to bring certain data collection practices into compliance with the COPPA rule.
These settlements make clear that children's privacy online will continue to be a subject of FTC scrutiny. And advertisers would do well to continually assess their compliance with the COPPA Rule and to discuss their COPPA obligations regularly with their third-party advertisers.
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