United States: Think You Don't Have To Worry About Kids' Privacy? Grow Up! Five Practical Tips For Reducing Your Risk

The first months of 2019 have seen several key developments in the world of children's privacy. There have been major enforcement actions, new legislative proposals, and new best practices and guidance issued, both in the United States and abroad.

The running theme in all these developments is that companies — especially those who may not intend to or may not be aware that they are targeting children — now need to account for underage users and take necessary precautions to secure their privacy. It's not sufficient to simply put in a company privacy policy that one's service is not intended for users under 13; if kids are using a service, a regulator is going to demand the service be kid-friendly.

This article analyzes recent developments and includes steps companies can take right now to protect their business.

Executive Summary

  • In the $5.7 million TikTok/Musical.ly settlement, the FTC relied heavily on "reliable empirical evidence" of audience composition when determining which sites are subject to the Children's Online Privacy Protection Act (COPPA).
  • The California Consumer Privacy Act (CCPA) extends additional privacy protections for 13 to 16-year-old California minors, causing a dilemma for U.S. businesses that need to decide whether to single out Californians for special treatment.
  • Proposed federal amendments to COPPA would strengthen the law and hold providers accountable if they have "constructive knowledge" that a user is underage.
  • The UK Information Commissioner's Office issued a sweeping new code of practice with strict requirements for providers to protect children's well-being.

FTC Considers TikTok/Musical.ly "Directed to Children," Leading to a Record-Setting Fine

On February 27, 2019, the FTC announced a record-setting $5.7 million fine to popular short-form video sharing platform TikTok, formerly known as Musical.ly, as part of a consent order over allegations that the company violated COPPA. The settlement is now the largest COPPA penalty ever obtained by the FTC.

COPPA applies to the operator of any website or online service "directed to children" that collects personal information from children (defined as those under 13 years of age), or any website or online service that has actual knowledge that it collects personal information from children. Unless an exception applies, an operator subject to COPPA must obtain verifiable parental consent before collecting any personal information from a child.

The FTC will evaluate whether a site or service is "directed to children" based on a variety of factors such as: the subject matter of the site or service, its visual content, the use of animated characters or child-oriented activities and incentives, music or other audio content, age of models, presence of child celebrities or celebrities who appeal to children, and language or other characteristics of the website or online service. In addition to these factors, the Commission may also generally rely on other "competent and reliable empirical evidence regarding audience composition."

The TikTok/Musical.ly app at issue allowed users to create and share short videos with other users. These videos typically featured users lip-syncing to popular music. Musical.ly's 2018 Privacy Policy stated that "The Platform is not directed at children under the age of 13." Nonetheless, the FTC, weighing the factors, concluded that Musical.ly was a child-directed service. The complaint stated that creating and sharing lip-syncing videos was a "child-oriented activity" and pointed to the presence of emojis like "cute animals and smiley faces," "simple tools" for sharing content, songs related to "Disney" and "school," and kid-friendly celebrities such as Katy Perry, Selena Gomez, Ariana Grande, Meghan Trainor and others.

This is a broad and somewhat striking interpretation, given that this type of content — lip-syncing, approachable design, bright colors, emojis, presence of pop music, etc. — can arguably be found on many sites and services not directed to children. (Take, for example, RuPaul's Drag Race and its associated app.) While the FTC interpretation here appears to set a worrisome precedent, it's possible the Commission may be relying less on the "subject matter" factors, and more heavily on other "competent and reliable empirical evidence" of audience composition.

According to the FTC complaint, there was quite damning empirical evidence that Musical.ly staff was aware of the popularity of their platform with children. For example, Musical.ly had received "thousands" of complaints from parents that their children under 13 had created Musical.ly accounts. Meanwhile, prominent press articles highlighted the popularity of the app among tweens and younger children; Musical.ly seemed to acknowledge this themselves when they published guidance stating, "If you have a young child on Musical.ly, please be sure to monitor their activity on the App." Lastly, the Children's Advertising Review Unit (CARU) met with Musical.ly's co-founder and flagged to the company the app's popularity with kids; when Musica.ly failed to address the issues CARU raised, CARU ultimately referred the case to the FTC.

As Musica.ly likely did not set out to appeal to kids when it launched its service, other companies should view the TikTok/Musical.ly settlement as a cautionary tale. However, if there is a silver lining here, it is that the FTC's shift toward relying on "reliable empirical evidence" of audience composition should provide a bit more certainty, compared to the "subject matter" factors. A company that does its own due diligence and can show hard evidence that kids are not using its service (for instance, through market surveys or demographic studies) should be in a better position to mitigate its risk.

CCPA: California's Privacy Rules for Minors Could Be a Major Headache Across the US

The CCPA, set to go into effect January 1, 2020, creates various new compliance burdens on many companies doing business in California. Among them is the requirement that a business may not sell the personal information of consumers they know to be less than 16 years old, without affirmative, opt-in consent from the parent or guardian (or from the consumers themselves if between the ages of 13 and 16). Moreover, under the CCPA, a company will still be responsible if it "willfully disregards" customer ages.

Notably, the definition of "sale" is broadly defined under the law (for example, it could include behavioral advertising or joint marketing promotions); it will be difficult to obtain opt-in consent at scale. As a result, some have argued that, practically speaking, this change raises the minimum age under COPPA from 13 to 16 for California residents only.

The CCPA creates a major compliance burden for businesses, as many global companies do not currently distinguish between users of different states within the United States. To adapt, some companies are considering adding a "state" field to user accounts (potentially based on IP address) and singling out California residents for different treatment. Another option is to raise the minimum age to 16 for the entire United States, though this approach might have a larger impact on revenue. It is also important to note that the law is silent regarding retroactive effect, so it is unclear whether users who are above the age of 13 but under the age of 16 at the time the CCPA is effective may be treated as adults under the law, or if they must go back to being treated as children.

That said, amendments are expected to the CCPA before it goes into effect in 2020. Moreover, the CCPA is very vulnerable to a constitutional challenge based on federal preemption, and the federal government could explicitly preempt the CCPA by passing new legislation, such as the bill described in the next section.

COPPA: New Proposed Amendments

In March 2019, Senators Ed Markey (D-MA) and Josh Hawley (R-MO) introduced a bill to amend and further expand the scope of COPPA. In addition to raising the minimum age to 16 across the United States, the bill text contains several other key provisions:

  • "Directed to Children" definition. In addition to looking at reliable empirical evidence of audience composition (like in the Musical.ly case described above), the bill also allows the FTC to look at reliable empirical evidence related to "the intended audience" of the app (emphasis added). In other words, any internal communications discussing what a developer or marketing teams wants their audience to be could be used against them as evidence.
  • Continuation of Service required. The service provider must still provide the service to the minor even after deleting the child's personal information, unless the operator is not "capable of providing such service without such information." As a result, for a service subject to COPPA, there must be a child-friendly build available: A developer cannot rely on kicking underage players out.
  • "Constructive knowledge" regarding individual's minor status. Similar to the CCPA, providers are required to comply if they have "constructive" knowledge of a child's age. It is unclear what level of information would satisfy this standard or the extent to which a service provider must investigate users' ages.
  • FTC to establish minimum security standards for all connected devices. The bill also targets connected devices for children, and requires them to adhere to minimum security standards, to be determined by the FTC.

The UK ICO Proposes Sweeping Guidance for Underage Privacy

The United States is not the only jurisdiction with sweeping children's privacy laws. The EU General Data Protection Regulation (GDPR) that went into effect in 2018 contains parallel protections, and EU member states may set their own minimum age standards (anywhere from 13 to 16 — see this link for more details).

More recently, in April 2019, the UK Information Commissioner's Office (ICO) released a 122-page guidance document entitled "Age appropriate design: a code of practice for online services." The document is out for consultation until May 31, after which the ICO will draft a final version to be laid before Parliament to come into effect before the end of the year. The public has an opportunity to read the code and fill in a survey to give their views.

Looking at the code of practice, there are a great deal of things that, if they remain in the final version of the code, will create substantial new compliance burdens for companies. Three key takeaways are:

  • Broader scope of services subject to rules. The burden of proof is on a provider to show its services are not appealing to kids, rather than relying on a standard related to the provider's actual knowledge. Moreover, online services that have a substantial number of underage users are subject to the rules, even if underage users are an insubstantial percentage of the overall base. This could mean many popular adult-oriented services may have to consider children for the first time.
  • Strict transparency/control requirements. The ICO recommends a dynamic and comprehensive privacy notice, designed for kids to understand. Moreover, all settings must be set to "high privacy" by default, with features and notices specifically designed to steer kids toward making good decisions.
  • "Targeting" and "profiling" must be off by default. Personalization of services, including using a child's data to suggest things like in-app purchases, must be opt-in. Previous guidance under COPPA suggested that contextual personalization might be okay without an opt-in, but the ICO rules require that personalization efforts be off by default, unless keeping them on is in the "best interest" of the child.

Five Practical Tips for Reducing Your Risk

The developments above make it clear that children's privacy is a hot topic, and it's unlikely to go away anytime soon. While much of the law here is in flux, there are a few things companies can do now to prepare:

  1. Re-analyze your site/services' appeal to children. The Musical.ly/TikTok case and ICO guidance both emphasize that a service may be subject to the rules even if the developers did not intend to target kids. Keep on the lookout for empirical evidence of your app's audience composition. For example, see if your marketing team has data regarding the target demographics of your app. Keep up on the news and see if the app is starting to become popular with younger users. Determine whether your app is being featured on any "Children's" or "Families" lists. In any case, counsel should be involved in this investigation to preserve attorney-client privilege. If there is any doubt, consider gating users based on age.
  2. Age-gate the right way. With respect to implementing an age-gate, the FTC has stated that a service provider cannot encourage children to lie about their age or make it easy for the child to circumvent the gate (for instance, by clicking the "back" button and trying again). When implementing an age-gate for a service that is already live, make sure that the gate is presented to existing users as well as new users, and that the language used in the age-gate is appropriate for your app's audience. Once you have users' ages, delete any personal information you may have collected from or about underage users.
  3. Perform privacy due diligence during and after M&A. Musical.ly was acquired by ByteDance Ltd. in August 2018 and merged with the TikTok app under the TikTok name. If you acquire a company, make sure you do thorough due diligence on any privacy issues your target might be bringing along. Acquirers should conduct a post-close privacy assessment to evaluate and remediate any risks. COPPA Safe Harbor programs are slowly gaining popularity with some companies; consider if they might be right for you.
  4. Train, train, train: Teach your customer service reps to handle underage users. Several privacy laws specifically require employees who handle sensitive data to be adequately trained: It's important that customer service reps can handle complaints from parents and know what to do when it sounds like a child might be on the other end of a customer support line. Customer support should also keep in close contact with your company's legal team and flag if they sense that a game might be unexpectedly popular with kids.
  5. Consider what you can do now to adapt to the ICO guidance. The ICO guidance is not yet binding, but the requirements are extremely strict. Some things you can do to prepare in the meantime include drafting kid-friendly privacy policies or other privacy settings to give a more privacy-protective experience to a child.

These are complicated issues, so companies should work closely with privacy counsel during this period of enhanced focus on children's privacy and take the necessary precautions.

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
Events from this Firm
10 Sep 2019, Speaking Engagement, California, United States

Benchmark Litigation and Managing IP will host their 3rd annual Autolex: Autonomous Vehicle Legal Forum.

17 Sep 2019, Speaking Engagement, California, United States

We are highlighting the importance of having a buttoned-up IP strategy and portfolio in two back-to-back panels. The first panel will be led by Fenwick’s David Hayes, one of the top IP attorneys in the US, along with noted IP strategist Shmuel Silverman of Multi-Innovation.

2 Dec 2019, Speaking Engagement, San Francisco, United States

With the revenue and lease standards in the rear-view mirror but CECL still to be adopted, it is as important as ever to keep up with new and evolving accounting standards and regulations especially given the SEC’s Disclosure Modernization and Simplification initiatives.

Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please 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