United States: New York Attorney General Reaches Record COPPA Settlement With AOL

Oath, Inc. (Oath), formerly known as AOL Inc., agreed to pay $4.95 million to settle allegations brought by the New York State Attorney General's Office that AOL violated the Children's Online Privacy Protection Act (COPPA) by collecting personal information from children to serve them targeted advertisements.

Notably, this is the largest penalty ever imposed in a COPPA enforcement action. However, the violation is based upon activity that is generally understood in the ad tech industry to be impermissible.

Background on COPPA

COPPA prohibits operators of online services directed to children under the age of 13 and the operators of online services that have actual knowledge that they are collecting personal information from a child under the age of 13 from collecting, using, or disclosing personal information of children under the age of 13 without first obtaining parental consent.

In July 2013, the FTC revised the definition of "personal information" to include persistent identifiers that can be used to recognize a user over time and across websites. The revision effectively prohibits covered operators from using tracking cookies and other persistent identifiers to track children across websites for most advertising purposes and to serve online behaviorally targeted advertisements on COPPA-covered websites.

Both the Self-Regulatory Principles for Online Behavioral Advertising set forth by the Digital Advertising Alliance and the NAI Code of Conduct set forth by the Network Advertising Initiative have long prohibited behavioral advertising to children under 13 in violation of COPPA.

Allegations Relating to AOL's Ad Exchange

The New York Attorney General's Office asserted that AOL, the operator of several ad exchanges for display ads, conducted billions of auctions for ad space on hundreds of websites the company knew were directed to children under the age of 13. Through these auctions, AOL allegedly collected, used, and disclosed personal information from users in violation of COPPA, enabling advertisers to track and serve targeted ads to young children.

According to the Attorney General, AOL operated several ad exchanges which, until recently, were not capable of conducting COPPA-compliant third-party bidding auctions because AOL's systems collected personal information from users and disclosed that information to third parties. AOL's policies actually prohibited the use of its display ad exchange to auction ad space on COPPA-covered websites to third-parties.

Despite these policies, however, the Attorney General claimed that AOL "flagrantly violated the law" because it used its display ad exchange to conduct billions of auctions for ad space on websites that it knew to be directed to children under the age of 13 and subject to COPPA. AOL allegedly obtained this knowledge because:

  • several AOL clients provided AOL with notice that their websites were subject to COPPA (and AOL conducted at least 1.3 billion auctions of display ad space from these websites); and
  • AOL itself determined that certain websites were directed to children under the age of 13 when it conducted a review of the content and privacy policies of client websites (AOL conducted at least 750 million auctions of display ad space from these websites).

Allegations Relating to AOL's Placed Ads Through Other Exchanges

AOL also operated a business that bid on ad space in auctions conducted by other ad exchanges. According to the Attorney General, several of the exchanges that AOL worked with had the ability to auction ad space on child-directed websites in a COPPA-compliant manner. When one of these exchanges conducted an auction for ad space on a child-directed website, the exchange passed information to bidders indicating that it was subject to COPPA. Bidders that received this information were expected to comply with COPPA as well.

However, the Attorney General claimed that prior to November 2017, AOL's systems ignored any information that it received from an ad exchange indicating that the ad space was subject to COPPA. Thus, whenever AOL won an auction for COPPA-covered ad space, its systems behaved as they normally did by collecting personal information directly from the user to serve a targeted advertisement to the user in violation of COPPA.

Allegations Relating to AOL's Account Manager

The Attorney General contended that an AOL account manager based in New York intentionally configured at least one client's accounts in a manner that she knew would violate COPPA in order to increase advertising revenue. In addition, the Attorney General claimed that AOL's documents showed that the New York account manager repeatedly represented to at least this client that AOL's display ad exchange could be used to sell ad space to third-parties in a COPPA compliant manner, which was not the case at that time. As a result of these misstatements, the client allegedly utilized AOL's display ad exchange to place more than a billion advertisements on COPPA-covered inventory.

The Settlement

In settling with the Attorney General, Oath agreed to pay a record $4.95 million in penalties and adopt comprehensive reforms intended to protect children from improper tracking.

In particular, the company agreed to establish and maintain a COPPA compliance program including:

  • The designation of an executive or officer to oversee the program;
  • Annual COPPA training for relevant personnel;
  • The identification of risks that could result in its violation of COPPA;
  • The design and implementation of reasonable controls to address the identified risks, as well as regular monitoring of the effectiveness of those controls; and
  • The development and use of reasonable steps to select and retain service providers that can comply with COPPA.

The settlement also requires that the company:

  • Retain an objective, third-party professional to assess the privacy controls that it implements.
  • Implement and maintain functionality that enables website operators that sell ad inventory through its systems to indicate each website or portion of a website subject to COPPA. The company must maintain this information in a database or similar system, and must disclose to each third-party bidder that relevant ad space is subject to COPPA.
  • Destroy all personal information collected from children in its possession, custody, or control, unless such personal information is required to be maintained by law, regulation, or court order.

Bottom Line

The AOL settlement – which requires AOL to pay the largest COPPA penalty ever to date – is the most recent instance in which the New York Attorney General's Office has sought to enforce COPPA. While most ad tech industry members have long known that behavioral advertising cannot be targeted to children under 13, problems obviously still exist.

In announcing the settlement, New York Attorney General Barbara Underwood said her office "remains committed to protecting children online and will continue to hold accountable those who violate the law." Her statement should serve as a forceful reminder of the need for operators, advertisers and ad networks to comply with COPPA or risk becoming the subject of an expensive enforcement action.

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
Similar Articles
Relevancy Powered by MondaqAI
Frankfurt Kurnit Klein & Selz
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Frankfurt Kurnit Klein & Selz
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions