Silicon Valley Apps for Kids: COPPA BASICS Laura D. Berger April 22, 2013

1. Silicon Valley Apps for Kids: COPPA BASICS Laura D. Berger April 22, 2013 The views expressed herein are those of the speaker, and do not represent the views of the Commission or any individual Commissioner.

2. Agenda • FTC privacy law basics. • Intro to FTC business education materials. • Discussion of the Children’s Online Privacy Protection Act, including existing requirements and 2013 changes, which will take effect on July 1, 2013.

3. FTC Jurisdiction • FTC Act (Section 5) prohibits unfair or deceptive acts and practices in or affecting commerce • FTC also enforces 45 other statutes and more than 30 trade regulation rules • Privacy standards the FTC enforces include Children’s Online Privacy Protection Act (“COPPA”), as well as other laws, such as the Gramm-Leach-Bliley Act and the Fair Credit Reporting Act.

4. FTC Act (Section 5) • Deception a material representation or omission that is likely to mislead consumers acting reasonably under the circumstances • Unfairness practices that cause or are likely to cause substantial injury to consumers that are not outweighed by countervailing benefits to consumers or competition and are not reasonably avoidable by consumers. • Note: Section 5 and COPPA violations often are alleged in tandem – e.g., if you say you don’t collect information from kids under 13, but you do.

5. FTC Advice for App Developers

6. Tell the truth about what your app can do. • Disclose key information clearly and conspicuously. • Build privacy considerations in from the start. • Be transparent about your data practices.  • Offer easy to find and easy to use choices. • Honor your privacy promises. • Protect kids’ privacy.  • Collect sensitive information only with consent.  • Keep user data secure.

7. Children’s Online Privacy Protection Act (COPPA) • COPPA is the only child-specific federal privacy law in the US. • Goals are to: • Permit parents to make informed choices about when and how children’s personal information is collected, used, and disclosed online; and • Enable parents to monitor their children’s interactions and help protect them from the risks of inappropriate online disclosures. • Among other things, operators of commercial websites and online services must provide NOTICE and obtain parents’ CONSENT before collecting personal information from children under age 13.

8. Overview of Changes to Rule • Definitions • Online and Direct Notices • Parental Consent Mechanisms • Confidentiality and Security of Children’s PI • Data Retention and Deletion • Safe Harbor Programs • New Voluntary Processes for FTC Approval

9. COPPA Enforcement • FTC actively enforces COPPA. • Agency has filed 21 federal court actions,and has obtained over $8.4 million in civil penalties.

10. Federal Court Orders • FTC is authorized to seek up to $16,000/violation in penalties, and may also seek: • Deletion of personal information collected without parental consent; • Employee education and written acknowledgement; • Written compliance report to FTC; and • Consumer education.

11. Who must comply under current Rule? • Operators of commercial websites and online services directed to children that collect, maintain, or provide the opportunity to disclose personal information or “PI.” • Operators of general audience sites and services(including teen/tween sites) withactual knowledge that they collect kids’ PI. • Entities on whose behalf operators collect the information

12. Additional Operators as of July 1, 2013 • An operator of a child-directed site or service that allows another person to collect PI directly from its users, either: (1) as an agent or service provider, OR (2) for the operator’s “benefit”, which applies to child-directed sites/services that embed 3rd party content collecting PII. (Under the Rule, the Operator benefits from this collection, even if the Operator does not access the PI itself). • A site/service that has actual knowledge it is collecting PII directly from users of a child-directed site/service. (See revised def’n of “Website/Online Service Directed to Children.”)

13. “Directed to Children” • Many factors: subject matter, visual content, age of models, language, graphics, activities, or incentives; whether ads promoting or appearing on the site or service aredirected to children; evidence re intended audience; empirical evidence about audience composition. • 2013 Changes: Sets forth criteria up front and - • Adds music and celebrities appealing to children. • Adds that a service collecting PI directly from users of a child-directed site is covered when it has “actual knowledge” it’s collecting on a such a site. • Allows a child-directed site/service that does not target U13 children as its primary audience to age-screen to provide COPPA protections only to U13 children.

14. “Directed to Children”: Mobile Apps

15. General Audience Site/Service • Must have actual knowledge that it has collected PII from a child. • “Actual knowledge” can come from asking a child’s age, grade, birthday, other age-identifiers. May also come from notification from a concerned parent or other individual.

16. Personal information • 2013 Definition: • Underlined items remain the same • Three items are virtually the same • Online contact info is very similar to email address. • Geolocationinfo (sufficient to identify street name and city/town) – Commission already said this was covered under old rule. • Screen/user names (that function as online contact info) • Persistent Identifiers (e.g., IP address, UDID, information stored in a cookie, processor or device serial numbers) • Photos, Videos, or audio files containing a child’s image or voice • First and Last Name • Physical address (including street name and city/town) • E-mail address • Social Security Number • Telephone number • A screen name revealing e-mail • A persistent identifier combined with personal information or “PI” • Any information tied to PI

17. “Collects or Collection” • Requesting, prompting, or encouraging that children submit personal information online, even when optional. • Enabling children to make the information public, e.g., in a chat room or profile. • Passive tracking linked to personal information. • 2013 Changes to definition: • replace the “100% deletion standard” with a “reasonable measures” standard: • This enables operators to provide interactive communities for children, without parental consent, so long as they take reasonable measures to delete all or virtually all of a child’s PI before it is made public.

18. What must Operators do under COPPA? • Post a privacy policy and links to the policy wherever personal information is collected. • Give parents direct notice of information practices. • With certain exceptions, obtain verifiable parental consent before collecting information. And . . .

19. …Operators also must: • Provide parentsaccessand opportunity to delete child’s personal information and opt-out of future collection. • Limit collection of personal information. • Establish and maintain reasonable procedures to protect the confidentiality, security, and integrityof personal information. • 2013: Operators must (1) “take reasonable steps to release [children’s PI] only to parties capable of maintaining its security”; (2) retain PI only as long as reasonably necessary to fulfill the purpose; (3) properly delete PI by taking reasonable measures to protect against unauthorized access to or use in connection with deletion.

20. Notices (Revised) • Improves the “direct notice” to: • Ensure that key information is presented to parents in a succinct “just-in-time” notice; • Provide a clear roadmap for operators as to content of direct notice depending upon its collection and use practices. • Streamlines the privacy policy by requiring a simple statement of: • Who is collecting information – all operators at the site/service • What information collected and how used; • That parent has control of the information.

21. Parental Consent • Must be reasonably calculated, in light of available technology, to ensure that person providing CONSENT is the child’s parent (or legal guardian). • The Rule provides a non-exhaustive list of approved methods to satisfy this requirement. • Can use another method, follow a safe harbor, or seek Commission approval of additional methods.

22. Verifiable Parental Consent:2013 Changes • Add new methods: • electronic scans of signed consent forms, • video-conferencing, or • use of government issued ID checked against a database and deleted promptly thereafter, • use of a debit card or other online payment system, if it provides notification of each monetary transaction. • Retains “Email Plus” • Adds 2 new approval procedures: • Commission approval – voluntary 120 day notice and comment • Safe Harbor approval – use of any method permitted by an approved program.

23. New Exceptions to Consent • (1) Where site/service collects parent’s online contact info (but no other PI from child) to keep the parent informed of a child’s activities; • (2) Where site/service collects persistent identifier (but no other PI) for sole purpose of providing “support for internal operations.” • (3) Where a plug-in collects persistent identifier on a child-directed site/service (but no other PI) from a 13+ previously registered user.

24. “Support for Internal Operations” • Using persistent identifiers for these purposes does not require notice and consent: • Maintain/analyze functioning of site/service • Perform network communications • Authenticate users/personalize content on site/service • Serve contextual ads, cap frequency of ads • Protect the integrity of the site/service • Ensure legal/regulatory compliance • Does not permit use for behavioral targeting or any other purposes. • Can seek Commission approval to add to the list. (Will publish for comment and determine within 120 days).

25. Data Security: Review of Changes Strengthens the Rule’s confidentiality, security, and integrity provision by: • Adding a requirement that operators take reasonable steps to release children’s PI only to parties capable of maintaining its security. Adds a data retention and deletion provision to: • Retain children’s PI for only as long as is reasonably necessary to fulfill the purpose for which it was collected; and, • Properly delete PI by taking reasonable measures to protect against unauthorized access to or use in connection with its deletion.

26. Review: Voluntary Approval Processes • Parental consent methods: Request for Commission approval of new mechanisms • Support for internal operations of the website or online service: Request for Commission approval to add new activities to the definition of support for internal operations • All requests published for public comment • Commission determination within 120 days of request

27. Self-Regulatory Safe Harbor Programs under COPPA • There are 5 approved safe harbors: • Aristotle, Inc. www.aristotle.com/integrity • CARU www.caru.org • ESRB www.esrb.org • Privo, Inc. www.privo.com • TRUSTewww.truste.com • An operator participating in and complying with an FTC-approved safe harbor will be deemed to be in compliance with the Rule.

28. Review: Other Changes • Strengthens COPPA Safe Harbors • Improves the “direct notice” to parents to: • Ensure that key info is presented in a succinct, “just-in-time” notice; • Provide a clear roadmap for operators as to content of direct notice depending on its collection and use practices. • Streamlines the privacy policy

29. FTC Resources for businesses

30. Questions?