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New York AG Concludes Investigation Into Online Profiling of Children

Discussion in 'Affiliate Marketing News' started by R. Newman, Sep 23, 2016.

  1. R. Newman

    R. Newman Guest

    New York AG Concludes Investigation Into Online Profiling of Children
    by Richard B. Newman
    September 23, 2016

    On September 13, 2016, the New York Attorney General announced results of “Operation Child Tracker,” ending illegal online commercial profiling of children at some of nation’s most popular kids’ websites. The landmark investigation by the NY OAG lasted for roughly two-years.

    According to the NY OAG, Viacom, Mattel, Hasbro and JumpStart Games violated the Children’s Online Privacy Protection Act by enabling third-party vendors, such as marketers or advertising companies, to track children’s online activity at websites for Barbie, Nick Jr., My Little Pony, American Girl, Hot Wheels and others, in violation of COPPA.

    COPPA prohibits operators of certain websites from collecting, using, or disclosing personal information (e.g., first and last name, e-mail address) of children under the age of 13 without first obtaining a parent’s consent. The operators of websites directed to children under the age of 13 and the operators of websites that have actual knowledge that they are collecting personal information from a child under the age of 13, including the collection of information used to track a child’s online movements, are subject to COPPA.

    Online behavioral advertising is a form of targeted advertising that selects an advertisement to serve to an individual based on previously collected information. For example, an individual’s browsing history, demographic information or personal interests. Website operators are strictly liable for the collection, use and disclosure of personal information by independent third-parties that are allowed to operate through their websites.

    “Federal law demands that children are off-limits to the prying eyes of advertisers,” said Attorney General Eric Schneiderman. “Operation Child Tracker revealed that some of our nation’s biggest companies failed to protect kids’ privacy and shield them from illegal online tracking. My office remains committed to protecting children online and will continue our investigation to hold accountable those who violate the law by tracking children.”

    “In enacting COPPA, Congress wisely provided for law enforcement by both the FTC and state attorneys general, so that there are multiple cops on the beat protecting children’s privacy,” said Jessica Rich, Director of the Federal Trade Commission’s Bureau of Consumer Protection. “We applaud these important actions by the New York Attorney General’s office, and appreciate their coordination with the Commission. These settlements send a strong message to companies about the importance of complying with the COPPA Rule.”

    The companies agreed to pay a combined $835,000 in penalties and implement significant reforms, including regular electronic scans to monitor for third-party tracking technologies, adopting procedures for vetting third-parties’ data collection practices to ensure that they comply with COPPA and providing notice to third-parties when they are operating through a website covered by COPPA. Hasbro participated in an FTC-approved “safe harbor” program and will not pay a penalty. Each of the settling companies cooperated in “Operation Child Tracker” and took remedial measures after being contacted by the NY OAG.

    Takeaway: The FTC has made it clear that the passive tracking of children’s personal information through a persistent identifier, and not just its active collection, is covered by COPPA. This settlement is particularly noteworthy given that it originates at the state-level. Website operators must take steps to proactively ensure that their children’s websites are free of improper third-party tracking technologies. For example, vetting advertisers, advertising networks and other third-parties that are permitted on websites in order to determine whether they collect personal information from users, or allow others to do so. Website operators should monitor their websites for unexpected third-party tracking technologies that are inadvertently introduced or “piggy-back” off of other third-parties.

    Consult an FTC compliance and defense lawyer in order to ensure that your behavioral tracking practices do not wind being investigated. It is not inconceivable that other state attorneys generals may follow suit.

    See here for details regarding the improper tracking technologies discovered during the course of the investigation.

    Richard B. Newman is an Internet marketing compliance and regulatory defense attorney at Hinch Newman LLP focusing on advertising and digital media matters. His practice includes conducting legal compliance reviews of advertising campaigns, representing clients in investigations and enforcement actions brought by the Federal Trade Commission and state attorneys general, commercial litigation, advising clients on promotional marketing programs, and negotiating and drafting legal agreements.

    HINCH NEWMAN LLP. ADVERTISING MATERIAL. These materials are provided for informational purposes only and are not to be considered legal advice, nor do they create a lawyer-client relationship. No person should act or rely on any information in this article without seeking the advice of an attorney. Information on previous case results does not guarantee a similar future result.

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