In the wake of the COVID-19 pandemic, children are spending more of their lives in the digital realm, both for education and entertainment purposes—but that doesn’t mean the Federal Trade Commission (FTC) is cutting online operators slack for not complying with the Children’s Online Privacy Protection Act (COPPA). Last week, the FTC levied a $4 million penalty against HyperBeard, Inc., a popular mobile app developer, to settle allegations that HyperBeard integrated third-party ad networks into its child-directed apps in violation of COPPA.(Due to HyperBeard’s inability to pay the full amount, the $4 million penalty will be suspended upon payment of $150,000 by HyperBeard).

The complaint is notable in that the FTC did not allege that HyperBeard itself collected any personal information from children—rather, the alleged violations centered around the company enabling third parties to collect personal information from children through its service. The fine serves as a warning to online operators that they are strictly responsible for their third-party integrations, even if they themselves do not collect personal information from children. Andrew Smith, Director of the FTC’s Bureau of Consumer Protection, emphasized, “If your app or website is directed to kids, you’ve got to make sure parents are in the loop before you collect children’s personal information. This includes allowing someone else, such as an ad network, to collect persistent identifiers, like advertising IDs or cookies, in order to serve behavioral advertising.”
Continue Reading It’s 10 p.m. Do You Know What Your Third-Party Integrations Are Doing?

The Federal Trade Commission is trying yet another approach to convey the message that the relationship between a social media “influencer” and the brand he or she is endorsing must be disclosed. This new guidance from FTC staff takes the form of a brochure (with accompanying video) aimed directly at influencers. It bluntly states that influencers “must comply with the law” when working with brands to recommend or endorse products and provides “tips on when and how to make good disclosures.”

The brochure is a distillation of the FTC’s Guides Concerning the Use of Endorsements and Testimonials in Advertising (the “Endorsement Guides”), as well as subsequent FAQs, guidance, and related materials. Arising out of the prohibition under Section 5 of the FTC Act on unfair and deceptive acts or practices, the Endorsement Guides require advertisers and endorsers (i.e., influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement. This type of arrangement is what the Endorsement Guides describe as a “material connection,” meaning “a connection between the endorser and the seller of the advertised product that might materially affect the weight or credibility of the endorsement (i.e., the connection is not reasonably expected by the audience).” The new brochure delivers this message as follows: “Telling your followers about these kinds of relationships [i.e., material connections] is important because it helps keep your recommendations honest and truthful, and it allows people to weigh the value of your endorsements.”
Continue Reading Influencing the Influencers: FTC Staff Release “Disclosures 101” Guidance for Online Endorsers

Singapore has enacted a law granting government ministers the power to require social media platforms to completely remove or place warnings alongside posts the authorities designate as false.

Unlike the compensation earned by child stars who perform on television, in films, or on other traditional media in California, the income generated by children who

Last week, the Federal Trade Commission made clear that child-directed parts of an otherwise general audience service will subject the operator of the service to the Children’s Online Privacy Protection Act (COPPA).

Just six months after the FTC’s record-setting settlement against TikTok, the FTC announced a $170 million fine against Google and its subsidiary YouTube to settle allegations that YouTube had collected personal information from children without first obtaining parental consent, in violation of the FTC’s rule implementing COPPA. This $170 million fine—$136 million to the FTC and $34 million to the New York Attorney General, with whom the FTC brought the enforcement action—dwarfs the $5.7 million levied against TikTok earlier this year. It is by far the largest amount that the FTC has obtained in a COPPA case since Congress enacted the law in 1998. The settlement puts operators of general-audience websites on notice that they are not automatically excluded from COPPA’s coverage: they are required to comply with COPPA if particular parts of their websites or content (including content uploaded by others) are directed to children under age 13.


Continue Reading The Company Who Cried “General Audience”: Google and YouTube to Pay $170 Million for Alleged COPPA Violations

The cost for violating the Children’s Online Privacy Protection Act (COPPA) has been steadily rising, and companies subject to the law should take heed. Last week, the Federal Trade Commission (FTC) announced a record-setting $5.7 million settlement with the mobile app company Musical.ly for a myriad of COPPA violations, exceeding even the December 2018 $4.95 million COPPA settlement by the New York Attorney General. Notably, two Commissioners issued a statement accompanying the settlement, arguing that the FTC should prioritize holding executives personally responsible for their roles in deliberate violations of the law in the future.

COPPA is intended to ensure parents are informed about, and can control, the online collection of personal information (PI) from their children under age thirteen. Musical.ly (now operating as “TikTok”) is a popular social media application that allows users to create and share lip-sync videos to popular songs. The FTC cited the Shanghai-based company for numerous violations of COPPA, including failure to obtain parental consent and failure to properly delete children’s PI upon a parent’s request.


Continue Reading Thank You, Next Enforcement: Music Video App Violates COPPA, Will Pay $5.7 Million

Most companies are familiar with the Children’s Online Privacy Protection Act (COPPA) and its requirement to obtain parental consent before collecting personal information online from children under 13.  Yet COPPA also includes an information deletion requirement of which companies may be unaware.  On May 31, 2018, the Federal Trade Commission (FTC) published a blog post

In the last few years, as advertising has followed consumers from legacy media such as television to online video and social media platforms, the Federal Trade Commission has been attempting to ensure that participants in this new advertising ecosystem understand the importance of complying with the FTC’s “Guides Concerning the Use of Endorsements and Testimonials in Advertising,” or the endorsement guides. The endorsement guides require advertisers and endorsers (also referred to as influencers) to, among other things, clearly and conspicuously disclose when the advertiser has provided an endorser with any type of compensation in exchange for an endorsement.

A failure to make appropriate disclosures may be a violation of Section 5 of the Federal Trade Commission Act, which prohibits unfair or deceptive acts or practices. In recent enforcement actions, press releases, guidance, closing letters and letters sent directly to endorsers (including prominent public figures), the FTC has made clear its belief that: (1) appropriate disclosures by influencers are essential to protecting consumers; and (2) in too many instances, such disclosures are absent from celebrity or other influencer endorsements.
Continue Reading The FTC’s Quest for Better Influencer Disclosures

In 2016, brands spent $570 million on social influencer endorsements on Instagram alone. This recode article takes a looks at how much influencers with certain followings can command, and whether they’re worth the investment.

And don’t overlook the legal issues associated with the use of social media influencers; the FTC just settled its first

Recent challenges to the Federal Trade Commission’s (FTC) authority to police data security practices have criticized the agency’s failure to provide adequate guidance to companies.

In other words, the criticism goes, businesses do not know what they need to do to avoid a charge that their data security programs fall short of the law’s requirements.

A series of blog posts that the FTC began on July 21, 2017, titled “Stick with Security,” follows promises from acting Chair Maureen Ohlhausen to provide more transparency about practices that contribute to reasonable data security. Some of the posts provide insight into specific data security practices that businesses should take, while others merely suggest what, in general, the FTC sees as essential to a comprehensive data security program.
Continue Reading More Insight From the FTC on Data Security—or More of the Same?

Searching “millennials killed…” on the Internet returns over 1.5 million results in .65 seconds. Commentators have blamed the generation raised by tablets, smartphones, and apps for killing everything from marriage to brunch, often deriding today’s youth for being too opinionated and too obnoxious. It is a bit ironic, then, that the right to complain was almost a casualty of the technology generation.

Today, ecommerce and social media are ubiquitous and intertwined. For example, any ecommerce site worth its salt will include interactive user comments that enable purchasers to praise or critique products. Moreover, the power of online review sites, such as Yelp and Rotten Tomatoes, to set consumer tastes is only increasing. For example, a study conducted at Harvard Business School concluded that a one-star improvement on Yelp would lead to a roughly 9% increase in revenue for restaurants. Considering how thin profit margins are in the restaurant sector, 9% could make or break a small business.

In response to the growing significance of user reviews, some companies sought to protect their revenue streams by including non-disparagement clauses in form contracts, such as terms of service and other click-through agreements. Retailers, studios, restaurants and even hotels used these gag clauses to suppress bad reviews by levying fines and imposing other penalties on consumers.
Continue Reading Get Your Gripe On: The Consumer Review Fairness Act Is Live