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E-Legal: FTC Slams Online Collectors of Kids' Personal Info

A company that operates numerous music Web sites will have to pay the largest civil penalty levied to date over violating the Children's Online Privacy Protection Act. Apparently serving public notice that it intends to vigorously enforce the privacy rules, the Federal Trade Commission has charged UMG Recordings Inc. with collecting unauthorized personal information from children and has ordered the company to pay $400,000.

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A company that operates numerous music Web sites will have to pay the largest civil penalty levied to date over violating the Children’s Online Privacy Protection Act, and the Federal Trade Commission is apparently serving public notice that it intends to vigorously enforce the privacy rules. UMG Recordings, Inc. has been ordered to pay $400,000, after charges were made by the Federal Trade Commission alleging violations that include collecting personal information from children online without first obtaining verifiable parental consent. In addition, Bonzi Software, a software distributor, will pay civil penalties of $75,000. The settlements also prohibit future COPPA violations, mandate the deletion of personal information collected, and allow the FTC to monitor COPPA compliance by the companies. The FTC claimed that each of the companies collected birth date information through their online registration processes, and thus had actual knowledge that they were collecting and maintaining personal information from many children under the age of 13. The complaints also said the companies neglected to post clear and complete privacy policies, and failed to give sufficient direct notices to parents of what personal information they intended to collect from children. According to the FTC, the settlements with UMG and Bonzi constitute the ninth and tenth COPPA settlements forged by the FTC since its COPPA Rule went into effect in April, 2000. Companies that direct their Web sites or online services to children under the age of 13 or that know should make sure they’re in compliance. The FTC’s Web site at http://www.ftc.gov/privacy/privacyinitiatives/childrens.html provides information that will help. Parents and teachers might also be interested in checking it out. In addition, the FTC is releasing a business alert on the “actual knowledge” standard of its COPPA Rule to help Web site operators and online service providers in meeting the Rule’s requirements. The alert can be accessed at http://www.ftc.gov/bcp/conline/pubs/alerts/coppabizalrt.htm . Eric Sinrod is a partner in the San Francisco office of Duane Morris ( www.duanemorris.com), where he focuses on litigation matters of various types, including information technology disputes. His Web site is www.sinrodlaw.com, and he can be reached at [email protected] . To receive a weekly e-mail link to these columns, please send him an e-mail with “Subscribe” in the subject line.

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