Mobile

Feds to mobile marketers: Stop targeting kids, or else (exclusive)

Above: Children use smartphones to play games and browse the Internet.

Image Credit: Shutterstock

The feds are focusing their investigative attention on the surging mobile ad space.

The Federal Trade Commission has begun aggressively going after tech companies suspected of violating the Children’s Online Privacy Protection Act, the FTC told VentureBeat exclusively.

The move comes after the FTC tweaked COPPA last year, giving online advertisers, gaming outfits, and others a so-called grace period to adapt to the rapidly changing online mobile advertising space or face the consequences.

That grace period is now over, and the FTC is coming after companies that are not in compliance with the new rules.

Mobile ad marketers, ad retargeters, and other firms that are caught selling information or otherwise violating COPPA statutes will be fined up to $16,000 per infraction. That translates into $16,000 for each app download or login where COPPA is being violated.

“The FTC remains committed to protecting children’s privacy online, even as mobile technology continues to evolve quickly — that’s what the revisions to the COPPA rule were about,” Mark Eichorn, the FTC’s assistant director of privacy and identity protection, told VentureBeat.

“In the mobile space, behavioral advertising to children is an area where we intend use the enforcement tools at our disposal to ensure children’s privacy is protected,” Eichorn added.

The FTC declined to say which specific companies are under investigation.

COPPA was crafted by Congress in 1998 to protect children from online predators and protect marketing firms from selling information about their Internet usage and personal details to third party data firms. When children log onto gaming sites and download apps, the information they give is, by law, supposed to remain safe with the companies they’re interacting with.

But that’s not always the case.

The move toward enforcement has broad implications for the mobile space, as some analysts warn that a small percentage of marketing outfits are illicitly selling data about children’s online habits and adults to third parties.

The 2013 revision to COPPA broadened the act, extending the definition of children’s personal information to include “persistent identifiers such as cookies that track a child’s activity online, as well as geolocation information, photos, videos, and audio recordings,” the FTC announced last summer.

See the FTC’s update to COPPA here.

According to the FTC:

COPPA mandates that website operators or online providers directed at kids 13 and under obtain verifiable consent from the parents or guardians before disseminating the information. The law says that without the verification, companies are on the hook for any information obtained from children be distributed or sold for marketing or other purposes. The law was formed in the early days of the Internet, and much has changed since then.

The FTC’s move shows how the feds have worked to keep pace with the changing nature of technology.

The mobile advertising space is especially complicated: It includes approximately 500 marketing firms, ad buyers, ad networks, ad targeters, and mobile analytics outfits, all aggressively a piece of a market that totaled $17.9 billion last year, according to eMarketer.

That figure is expected to reach over $34 billion by the end of 2014.

It is high time the feds started looking into the mobile ad ecosystem, says Jesse Hurwitz, Google’s former head of global strategy for mobile ad platforms.

Hurwitz, who now works at AdBrain, a London ad targeting startup that works across multiple platforms like desktops, tablets, and smart phones, says transparency and open lines of communication between virtual ad firms and their clients are absolutely necessary for keeping the mobile ad space honest.

He told VentureBeat while a majority of companies are legitimate, there are a few giving bad names to the sector. And Hurwitz told VentureBeat that the government needs to open the channels of communication with the honest players working the space.

“We need that pipeline of communication with the feds,” Hurwitz said.

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