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COPPA Makes its Mark on HBO’s Silicon Valley

You know you’ve made it when you’re featured on HBO’s hit comedy, Silicon Valley, the show that portrays the hilarious ups and downs of a Bay Area tech start-up.  The Children’s Online Privacy Protection Act (COPPA) got a starring role last week in the second episode – “Term of Service” – of the show’s 4th Season on HBO.

To recap, Dinesh Chugtai, CEO of the company that developed the wildly popular app “PiperChat,” has a breakdown when he realizes that the video chat app violates COPPA because 1/3 of its users are kids under 13 years old.  He loses his power-trip swagger when the start-up’s ex-con lawyer tells him about the $16,000 per usage violation –potential fines in the billions of dollars – and eventually collapses in a pitiful heap in the company bathtub. 

What Dinesh and the show’s writers don’t know is that it in June 2016, the FTC announced that it would be increasing its maximum civil penalty amount from $16,000 to $40,000 per violation under COPPA.

Had Dinesh turned to the Children’s Advertising Review Unit (CARU) before taking PiperChat live, we would have explained exactly what he needed to do to keep his “incredible” app on the right side of the law.

As a long-time expert in the COPPA arena, CARU works with app developers and website operators from the conceptual stage through to launch and beyond to help companies incorporate best privacy practices into their design. 

COPPA imposes specific requirements on operators of websites and online services directed to children or those that have actual knowledge that children are on their service.  The law was recently updated in 2013 to include photos, videos and audio files containing a child’s voice or image in its definition of what is personally identifiable information .

The good news for the guys at PiperChat is that the FTC rarely fines companies such large amounts and looks at a number of factors when considering penalties including, among other factors, the level of harm to the public, gains made by the company, and the defendant’s ability to pay.  In a recent FTC settlement, the FTC took the company’s ability to pay into consideration and only fined the advertising platform, InMobi, $950,000, which similar to PiperChat, could have amounted to billions.

The bad news is that the fine here would still be quite large because it is a video chat app.  The harm in this case would be considerable because children could communicate via video chat, thereby publicly disclosing their personally identifiable information: photos, videos and audio recording of themselves. 

The best news is that for non-fictional companies operating in the children’s space, there is a real-world organization that exists to provide clear guidance on COPPA and otherwise assure that marketing to children is truthful, accurate, not misleading and appropriate.

We don’t anticipate that the show’s writers will be turning to CARU for advice on plot and structure, given that strict compliance with all applicable laws and regulations doesn’t make for exciting TV.

We do, however, stand ready to help companies of all sizes comply with COPPA’s provisions and CARU’s guidelines. 

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