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Firms sweat details of revised COPPA rules

Jun 4, 2013 by

Mickey Mouse could use more lawyers.

Tech and media companies — from Disney to small app makers — face the same dilemma as they near a July 1 deadline to bolster online privacy protections for children: getting it right.

Industry advocates paint a dire scenario of costly audits, abandoned projects and disrupted business models as firms prepare for the first significant changes under the 1998 Children’s Online Privacy Protection Act since the rise of mobile technology and social networks. Privacy groups and the Federal Trade Commission, which set the new COPPA requirements, view the expanded rules as vital to protecting kids. And while few denounce that goal, the tensions underscore new complexities in an era where businesses increasingly rely on data collection and children have unparalleled access to the Internet.

(PHOTOS: Politicians and their iToys)

Affected businesses unite on one point: The shifts meant to promote kid safety could destroy that very market.

“What we fear is the post-July 1 case where the FTC decides to make an example out of somebody who has always been an upstanding company but they misinterpret some nuance of this vaguely written rule,” said Tim Sparapani, anApplication Developers Alliance lobbyist. A former director of public policy at Facebook, he pointed to smaller companies already postponing or avoiding kid-related projects altogether.

The changes increase the types of companies that require parental consent before collecting information from kids under 13. This includes plug-in makers or app developers that knowingly use sites and services directed at children. And it puts more responsibility on operators to make sure third-party businesses obey.

They also broaden the definition of personal information to include photos and videos. The real stickler for companies, though, is the inclusion of identifiers that recognize a user over time — such as IP addresses or data stored in cookies — if that information gets used for purposes beyond internal operations. This may limit what businesses know about users’ interests.

Regulators intend the strengthened controls to limit digital marketing to a vulnerable population. But companies have shot back at rules they see as going too far — and too fast. While the updated requirements came out last December, businesses say the FTC only recently gave them guidance on how to meet them. Even now, some appear uncertain as to whether they fall within the rules’ boundaries.

“A lot of these companies are trying to determine if cartoons or fuzzy bunnies would be considered directed at children,” said Heather Federman, a legal and policy fellow at the Future of Privacy Forum who specializes in children’s privacy.

The process requires some businesses to overhaul infrastructure, reconstruct databases and establish new safeguards.

“It’s not a trivial expense,” said Jim Halpert, a lawyer who advises technology and content companies. “The proposed rule will likely dry up the market for behavioral advertising on child-directed sites.”

For some, that’s the intent.

via Firms sweat details of revised COPPA rules – Jessica Meyers –

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