The FTC Judgment against Apple… was this the first COPPA 2.0 Fine?

Readers of this blog know that I’ve been predicting that in 2014 the FTC will begin to file complaints against mobile developers who are not compliant with the newly updated COPPA law, which went into effect in July 2013.

On January 15, the FTC announced a consent decree against Apple for deceptive sales tactics in the Apple App store.  The issue is the fact that Apple did not make it clear to parents that once they entered their password to allow the child to download an app (even a free app), that the child could go ahead and buy anything they wanted for a period of 15 minutes.  As kids do, some kids went overboard, buying over $1000 of apps and virtual goods, giving their parents a big surprise when the credit card bills arrived.

WAS THIS FTC ACTION ABOUT COPPA?

So how does this relate to COPPA? Well, it’s similar, because the issue is parental approval of activity that’s happening on a mobile device that is being operated by their child.  But it’s actually not about COPPA, because the issue isn’t protection of the child’s online privacy, or disclosure of an app’s privacy data policy, it’s about parental control over in-app purchases.

Apple had already agreed to correct this issue and issue refunds, so they were mildly annoyed that the FTC chose to jump into an already settled case (the text of Tim Cook’s letter to Apple employees is here). But Apple will be refunding a minimum of $32.5M to parents affected by this problem.

NOTHING TO SEE HERE, KEEP MOVING

So unfortunately, the $32.5M Apple judgment just adds more confusion to the already murky issue of COPPA and mobile apps. The $32.5M wasn’t about COPPA. It wasn’t a fine at all – it’s a refund to consumers. Privacy of children was not an issue at all.  Informed parental consent was a key part of this issue, and it is also a key part of COPPA. Is your head spinning yet?

STAY TUNED, PLENTY MORE COPPA COMING IN 2014

If and when the FTC begins to go after game developers who are not compliant with COPPA, we’ll be here with analysis and commentary. 

In the meantime, if you'd like to educate yourself on COPPA, here's a page of history and links we've created for game developers at AgeCheq. To learn more about COPPA directly from The Federal Trade Commission, check out this list of answers to frequently asked questions: http://business.ftc.gov/documents/Complying-with-COPPA-Frequently-Asked-Questions