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.