Two app developers will pay a combined $360,000 in civil penalties for violating a federal law protecting children's online privacy.
The cases against LAI Systems and Retro Dreamer are the first in which the Federal Trade Commission (FTC) alleges that companies allowed advertisers to use persistent identifiers to serve advertising to children. This form of personal information were added to the Children's Online Privacy Protection Act (COPPA) in 2013.
Persistent identifiers are pieces of data that are tied to a particular user or device.
In its complaint against LAI Systems, the FTC alleged that the company created a number of apps directed to children, including My Cake Shop, My Pizza Shop, Hair Salon Makeover, Friday Night Makeover, Marley the Talking Dog and Animal Sounds. According to the FTC's complaint, the defendant allowed third-party advertisers to collect personal information from children in the form of persistent identifiers.
The company failed to inform the ad networks that the apps were directed to children and did not provide notice or get consent from children's parents for collecting and using the information.
The settlement with LAI Systems prohibits the company from further violations of the COPPA Rule, and requires the company to pay a $60,000 civil penalty.
In its complaint against Retro Dreamer, and its principals, Craig E. Sharpe and Gavin S. Bowman, the FTC alleged that the company created a number of apps targeted to children, including Ice Cream Jump, Happy Pudding Jump, Ice Cream Drop, Sneezies, Wash the Dishes, Cat Basket and Tappy Pop.
The defendants in this case, according to the complaint, allowed third-party advertisers to collect children's personal information through the apps. One advertising network over the course of 2013 and 2014 specifically warned the defendants about the obligations of the revised COPPA Rule, and also told the defendants that their apps appeared to be targeted to children under the age of 13.
The settlement with Retro Dreamer, Sharpe and Bowman prohibits the defendants from further violations of the COPPA Rule, and requires the defendants to pay a $300,000 civil penalty.