New COPPA Rules Could Mean Big Bucks For Startups

COPPA lawsuits
Are the new Children’s Online Privacy Protection Act going to cost startups a whole lot of money?

As of July 1, 2013, the new Children’s Online Privacy Protection Act (COPPA) rules are in effect. The Federal Trade Commission (FTC) regulation is aimed at protecting child privacy online, but internet companies aren’t thrilled with the FTC’s definition of “personal information” under the new guidelines. They foresee the law as a financial burden for some start-up companies and a disaster for others. Estimated annual costs of the new regulation are said to be $6,223 for current Web services and $18,670 for new companies. However, some tech experts feel that small new companies, which provide third party services such as ads or plug-ins, will forego collecting interactive content altogether rather than go through what may be a complicated parental consent process.

An attorney for FTC said the new regulation was a needed update on the Children’s Online Privacy Protection Act, passed by Congress in 1998 over growing concern for deceptive online advertising aimed at kids. The protection act was intended to get parents more involved with online data involving their children and to protect the privacy of “personally identifiable information of children collected online.” FTC Associate Director Maneesha Mithal claimed that “parents should be in the driver’s seat.” They should know the data that is being collected about their children, how it is collected, and how it is being used. Under the new rule, these internet groups can be held liable only if the FTC can ;show that they deliberately sought and collected personal information from children.

A non-partisan technology think tank, TechFreedom, hosted a panel discussion on the new rule, during which its president, Berin Szoka, claimed, “The reality is most of the sites and services, like Facebook or Twitter, don’t have an option available for kids.” Advocates voiced skepticism about the new ruling’s effect on online advertising and so-called kid friendly websites. It was suggested that PinewoodDerby.org, a Boy Scouts website, might be affected by the new rule.

Everyone wants kids to be adequately protected online, but is the wording of COPPA a recipe for disaster that will create unnecessary boundaries to entry in the tech field?
Are you a start-up that wants to make sure you’re COPPA compliant? Contact Kelly Warner Law for a website audit. For the record, a COPPA violation could cost you millions. So, if you haven’t considered the statute before, it’s a good idea to do so now – especially since the law has broadened.

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