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US FTC proposes changes to Children’s Online Privacy Protection Rule to discourage monetizing of children’s data

The FTC has proposed significant changes to its children’s data privacy Rules with stricter regulations on data handling and consent, and shifting responsibility from parents to service providers.

Off-by-default option for targeted advertising, a written children’s data security program, and stricter regulations on the handling of children’s data—these are some of the suggestions put forward by the Federal Trade Commission (FTC) of the US to change the Children’s Online Privacy Protection Rule (COPPA Rule). The proposed new rules “would place new restrictions on the use and disclosure of children’s personal information and further limit the ability of companies to condition access to services on monetizing children’s data” said the FTC in a press release.

The FTC is seeking to update the COPPA Rules (that protect the privacy of children under the age of 13) to cover the evolving ways personal information is being collected, used, and disclosed, including monetising children’s data and clarifying and streamlining the rule. The organization has invited comments on its proposed changes to the COPPA Rule.

As per the press release, the proposal aims to shift the burden from parents to providers to ensure that digital services are safe and secure for children. In a notice that is yet to be published in the Federal Register, the FTC proposed several changes to the rule, including:

Verifiable parental consent for third-party access to data: Website and online service operators would be required to obtain separate verifiable parental consent to disclose information to third parties, including third-party advertisers, unless the disclosure is integral to the website’s or online service’s nature.

“Firms cannot condition access to services on disclosure of personal information to third parties.”

Operators to send notice before exercising internal operations exceptions: Currently, an exception in the rules allows operators to collect persistent identifiers of children (and no other personal information) without first obtaining verifiable parental consent, provided that it is used to “support for the internal operations of the website or online service.”

The proposed rule changes suggested that operators utilizing this exception must provide an online notice that “states the specific internal operations for which the operator has collected a persistent identifier and how they will ensure that such identifier is not used or disclosed to contact a specific individual, including through targeted advertising.”

Maintain a written children’s data security program: “The FTC has proposed strengthening the COPPA Rule’s data security requirements by mandating that operators establish, implement, and maintain a written children’s personal information security program that contains safeguards that are appropriate to the sensitivity of the personal information collected from children,” said the press release.

Data to be retained only for specific purposes: Regarding data retention, the FTC suggested that personal information should be retained only for as long as is necessary “to fulfill the specific purpose for which it was collected.” This would prohibit operators from using retained information for secondary purposes and disallow them from retaining the information indefinitely. The rule would also require operators to release a written data retention policy for children’s personal data.

Limits on push notifications: Operators would be prohibited from using the abovementioned identifiers and similar contact information to send push notifications to children and “prompt or encourage them to use their service more.” If an operator does have to use the information in such a manner, the same will have to be flagged in their COPPA-required direct and online notices.

Ed Techs to access children’s data only for non-commercial purposes: The proposed rule suggests schools and school districts may authorise ed-tech providers to collect, use, and disclose students’ personal information only for a school-authorised educational purpose and not for any commercial purpose.

Prohibition against conditioning a child’s participation in collecting personal data: The proposal bans collecting personal information of a child more than is reasonably necessary to participate in a game, offering of a prize, or another activity, reinforcing current rules of prohibition. Further, the FTC is considering adding new language to this section to clarify the meaning of “activity.”

Increasing accountability for Safe Harbor: “The proposed rule would increase transparency and accountability of COPPA Safe Harbor programs, including by requiring each program to publicly disclose its membership list and report additional information to the Commission,” said the FTC.

Expanding the definition of personal information: The FTC proposed to change some definitions in the Rule, like that of “personal information” to “include biometric identifiers.”

Earlier in 2023, Meta faced flak by the FTC for allegedly monetizing children’s data and putting minors at risk. Citing such issues with Meta for a third time, the FTC then proposed that the company be prohibited from monetizing children’s data. The abovementioned Rules would be a step towards this direction while putting such restrictions on all companies dealing with children’s data.

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I'm interested in the shaping and strengthening of rights in the digital space. I cover cybersecurity, platform regulation, gig worker economy. In my free time, I'm either binge-watching an anime or off on a hike.

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