The FTC proposes new changes to COPPA Rule

The Federal Trade Commission (FTC) today proposed new changes to the Children's Online Privacy Protection Rule (COPPA Rule) that would place new restrictions on the use and disclosure of children’s personal information.

The FTC proposes new changes to COPPA Rule

The Federal Trade Commission (FTC) today proposed new changes to the Children's Online Privacy Protection Rule (COPPA Rule) that would place new restrictions on the use and disclosure of children’s personal information. The proposal aims to shift the burden from parents to providers to ensure that digital services are safe and secure for children.

Proposed new changes to the Children's Online Privacy Protection Rule

  • Requiring Separate Opt-In For Targeted Advertising: Website and online service operators covered by COPPA would now 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 nature of the website or online service. Firms cannot condition access to services on disclosure of personal information to third parties.
  • Prohibition against Conditioning a Child’s Participation on Collection of Personal Information: The proposal reinforces the current rule’s prohibition on conditioning participation in an activity on the collection of personal data to make clear that it serves as an outright ban on collecting more personal information than is reasonably necessary for a child to participate in a game, offering of a prize, or another activity. In addition, the FTC is considering adding new language to this section to clarify the meaning of “activity.”
  • Limits on the support for the internal operations exception: The current rule allows operators to collect persistent identifiers without first obtaining verifiable parental consent as long as the operator does not collect any other personal information and uses the persistent identifier solely to provide “support for the internal operations of the website or online service.” The proposed rule changes would require operators utilizing this exception to 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.
  • Limits on nudging kids to stay online: Operators would be prohibited from using online contact information and persistent identifiers collected under COPPA’s multiple contact and support for the internal operations exceptions to send push notifications to children. Operators that use personal information collected from a child to prompt or encourage use of their service would also be required to flag such usage in their COPPA-required direct and online notices.
  • Changes related to Ed Tech: The FTC has proposed codifying its current guidance related to the use of education technology to prohibit commercial use of children’s information and implement additional safeguards. The proposed rule would allow schools and school districts to authorize ed tech providers to collect, use, and disclose students’ personal information but only for a school-authorized educational purpose and not for any commercial purpose.
  • Increasing accountability for Safe Harbor programs: 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.
  • Strengthening data security requirements: 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.
  • Limits on data retention: The FTC also would strengthen the COPPA Rule’s data retention limits by allowing for personal information to be retained only for as long as necessary to fulfill the specific purpose for which it was collected. The proposed change would also prohibit operators from using retained information for any secondary purpose, and it explicitly states that operators cannot retain the information indefinitely. The Rule would also require operators to establish, and make public, a written data retention policy for children’s personal information.

The proposed changes to the COPPA Rule have the potential to significantly impact businesses that collect or use personal information from children. Businesses will need to carefully review the proposed changes and take steps to comply with the new requirements. This may include updating their privacy policies, obtaining verifiable parental consent for targeted advertising, and implementing additional data security measures.

Businesses that fail to comply with the COPPA Rule could face legal action from the FTC. The FTC could impose fines of up to $43,792 per violation. Businesses could also face reputational damage if they are found to be violating the COPPA Rule.

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