FTC Unveils Updates to COPPA Rules

Joined by interested legislators from both parties and both
Houses, Federal Trade Commission chairman Jon Leibowitz unveiled the final version
of the FTC's proposed changes and updates to its rules enforcing the Children's
Online Privacy Protection Act.

Those include bringing geolocation, cookies (plug-ins) and
behavioral targeting explicitly within the rules.

He was joined by Sens. Jay Rockefeller (D-W. Va.) and Mark
Pryor (D-Ark.) as well as Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas),
the latter two cochairs of the Bipartisan Congressional Privacy Caucus.

"Under the new Rule, when a children's website or
application allows third-parties to collect information from children, those
websites and apps will be liable under COPPA," said Rockefeller.
"Furthermore, those third-parties will also be held liable if they know
they are collecting information on websites or apps directed toward children."

Leibowitz outlined the key changes:

  1. The rules are expanded to include geolocation, photos and
    videos, IP addresses and mobile device IDs in the list of personal information
    that comes under COPPA protections.
  2. It closes a loophole that allowed third parties to target kids through plug-ins
    and without getting parental consent that they would have needed otherwise. 
  3. It also extends personal info collection restrictions to third parties
    including ad nets, though narrowed to make it clear that means only third
    parties with actual knowledge that the info is being collected from a
    child-directed, COPPA-covered site.

Leibowitz said networks can continue to advertise on sites
directed to children and that it is only behavioral advertising that is
covered, and in a simple and straightforward way that provides a "small
congressionally mandated "oasis" sheltering privacy. That way is to ensure
that, until and unless they get parents' consent, sites and marketers may not
track kids to build massive profiles for targeting, "period," he
said. The rules also do not apply to app stores, but only COPPA-protected sites
collecting info.

Leibowitz also said the rules also now encourage the
industry to come up with new and innovative ways to let parents provide that
consent. They will have 120 days to come up with proposals for a flexible,
easier way to provide parental choice and control. He also praised the
positives of online education and access and of advertising to the economy, but
said this was targeted, in part, at the "insatiable" of some
marketers to track kids online.

Markey drew a parallel between protection kids online and
protecting them in schools, invoking the Sandy Hook killings. He said that
protecting kids was brought to the forefront by the shootings, and said it was
just as important to protect kids online, which is their new playground, as it
is to protect them in schools. Barton seconded that, saying that just as the
events in Connecticut showed how vulnerable kids are online, what occurs on the
Internet every day shows how vulnerable they are in cyberspace.

All the legislators pointed out that the online world has
changed dramatically and rules need to catch up.

Rockefeller said that when writing the bill a decade ago
they could not anticipate the explosion of targeted marketing and of mobile

Both Markey and Barton put in a plug for their kids do-not-track
bill, which would apply new restrictions to data collection from kids under 15 --
COPPA remains targeted to kids 12 and under -- and provide an "eraser
button" for info that kids supplied but later regretted. They conceded the
bill was not going to pass anytime soon, so it was important that the FTC
stepped in to do what it could under existing law.

Dissenting from the report was FTC commissioner Maureen
Ohlhausen, who said she thought they went beyond the FTC's authority granted by
COPPA while saying she backed child privacy protection as a goal she strongly
supports. "As the Supreme Court has directed, an agency 'must give effect
to the unambiguously express intent of Congress.' Thus, regardless of the
policy justifications offered, I cannot support expanding the definition of the
term "operator" beyond the statutory parameters set by Congress in COPPA,"
she said.

The key changes came as no surprise. TheFTC back in September 2011 proposed adding behavioral advertising tracking
cookies and geolocation information to the definition of kids' personal
information that behavioral marketers and websites must get permission from
parents to obtain.

Thecable industry had argued that COPPA was already working and no major
changes were needed which could inadvertently stifle innovation or tailored
online experiences.

"We applaud the Federal Trade Commission and chairman
Leibowitz for standing with parents and making these vital updates to the COPPA
rules," said Common Sense Media CEO James Steyer. "Parents -- not
social networks or marketers -- will remain the gatekeepers when it comes to
their children's privacy not only online, but also on phones. What's more,
these updates to COPPA effectively balance growing privacy concerns and the
paramount rights of children and families with the tech industry's need to
innovate. "

"The Commission's decision today is a major step forward,"
said Jeff Chester, executive director of the Center for Digital Democracy, in a
statement. "We are especially gratified that this decision puts to rest the
longstanding and disingenuous claims by the digital marketing industry that
cookies and other persistent identifiers are not personally identifiable
information. The revised rules also address the increasingly pervasive use of
geolocation, behavioral targeting, and social media data collection. But we are
concerned about possible loopholes that could undermine the intent of the
rules. CDD plans to continue closely analyzing the emerging marketing and data
practices targeted at children -- with a sharp focus on app developers and
social marketers like Facebook -- and will file complaints against any company
that violates the new rules."

Chester told B&C/Multichannel News that was a reference
to the app store carve-out. "Apple and Google don't want to be held
responsible for the app industry data collection practices," he said.
"But they should require that apps meet minimum privacy standards,
including for children. We plan to press the app stores to play a role ensuring
COPPA is implemented."

Leibowitz said he thought the resulting rule changes were
balanced but still strong.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.