HyperBeard Inc., has agreed to pay $150,000 and to delete personal information it illegally collected from children under 13.
In a complaint filed by the Department of Justice on behalf of the Federal Trade Commission (FTC), the Commission alleges that HyperBeard Inc., a developer of apps that are popular with children, violated the Children’s Online Privacy Protection Act (COPPA).
According to the Commission, HyperBeard allowed third-party ad networks to collect personal information in the form of persistent identifiers to track users of the company’s child-directed apps, without obtaining verifiable parental consent or notifying parents.
Subsequently, the ad networks utilised the identifiers to target ads to children using HyperBeard’s apps.
“If your app or website is directed to kids, you’ve got to make sure parents are in the loop before you collect children’s personal information,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection. “This includes allowing someone else, such as an ad network, to collect persistent identifiers, like advertising IDs or cookies, in order to serve behavioral advertising.”
Under the COPPA rule, child-directed websites, apps, and online services are required to provide notice of their information practices, provide notice of the use of persistent identifiers for targeted adversities and obtain parental consent prior to collecting the personal information of children under the age of 13.
As part of the proposed settlement, HyperBeard’s CEO Alexander Kozachenko and Managing Director Antonio Uribe, are required to notify and obtain verifiable parental consent for any child-directed app or website they offer thats collects the personal information of children under the age of 13.
Kozachenko and Uribe are also prohibited from using or benefiting from the personal data they collected and must destroy that data.
The settlement includes a $4 million penalty, however as HyperBeard are unable to pay the full amount, the original settlement will be suspended upon the payment of $150,000.
In a statement, FTC Chairman Joseph Simons said: “If our goal is to make compliance more attractive than violation, we also should consider the cost and effect of the other sanctions imposed in the context of an enforcement action. These effects include the costs and constraints of complying with the injunction; the fencing in of otherwise legal conduct; the reputational effect of the sanction; the threat of follow-on actions by shareholders, private plaintiffs, and other regulators; and other collateral consequences, such as the effect on relationships with business partners, vendors, investors, and regulators. All of these non-monetary sanctions can have substantial deterrence effect on violative behavior.”
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