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In a move that surely caught the attention of digital developers big and small, the Federal Trade Commission announced a $50,000 settlement this week with mobile application developer W3 Innovations, LLC. The commission charged the company, which does business as Broken Thumbs Apps, with violating the Children’s Online Privacy Protection Act (COPPA). According to the complaint [PDF], several of the defendant’s apps were directed at children but failed to comply with the act’s prior parental consent requirement. There have been more than 50,000 downloads of applications included in the complaint, which include the Emily’s Girl World, Emily’s Dress Up, Emily’s Dress Up & Shop, and Emily’s Runway High Fashion apps. The FTC targeted W3 for collecting and disclosing information from tens of thousands of children under 13 without the required consent. The commission alleged that the defendants collected and maintained email address, and allowed children to publicly post personal information. “The FTC’s COPPA Rule requires parental notice and consent before collecting children’s personal information online, whether through a website or a mobile app,” said FTC chairman Jon Leibowitz in a statement. “Companies must give parents the opportunity to make smart choices when it comes to their children’s sharing of information on smartphones.” With more than a third of Americans now using smartphones and other mobile devices, it was only a matter of time before an app maker found itself caught in the FTC’s regulatory web. According to Andrew Serwin, founding chair of the privacy, security, and information management practice at Foley & Lardner, when an app can be construed as being directed at children, a big issue for developers will be figuring out a way to get the verifiable parental consent required by COPPA. “Obviously the FTC is signaling that it’s certainly going to enforce against these app developers,” he says. Although the commission has made it clear that it’s moving into new territory, Serwin says one element was missing from the W3 consent decree: The FTC didn’t tack on a requirement of a consumer education remedy, as it has in the past for COPPA violations. “That usually requires linking and certain text to appear when PII [personally identifiable information] is collected,” he says. “Obviously with mobile you have much less screen room than you do on a computer.” The FTC recognizes that how “you do disclosures in the mobile space is a little different than how you would on the Internet.” COPPA might have been the first law to trigger an FTC enforcement action, but there are other laws that app developers need to be concerned about as well. “If they’re using electronic messaging, you can trigger CAN-SPAM [Controlling the Assault of Non-Solicited Pornography And Marketing Act], which the FTC has some authority over,” says Serwin. A broader issue, according to Serwin, is making sure that what’s being disclosed to consumers is clear and accurate, “to the extent it can be, depending on your space limitations.” He says that any statements the FTC would consider to be misleading could set a developer up for a Section 5 violation of the FTC Act. “If there was a lack of data security, the FTC has alleged that as an unfair practice in the past, so that has some application for mobile.” So what should companies be doing in this new era? Serwin points out that policies “may not be app-specific” and that “companies have to decide how to coordinate their privacy efforts.” He says that having an information governance structure is important. “It’s certainly not legally required, but it helps companies get their proverbial ducks in a row.”

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