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By Jimmy H. Koo
Sept. 13 — Viacom Inc., Mattel Inc., Hasbro Inc. and JumpStart Games Inc. agreed to pay a total of $835,000 in penalties to settle allegations that the companies' websites allowed third-party vendors to illegally track children's online activity, New York Attorney General Eric T. Schneiderman (D) announced Sept. 13.
The federal Children's Online Privacy Protection Act (COPPA) prohibits unauthorized collection of children's personal data on websites that are directed to children under 13. Each of the companies' website had “third party tracking technologies” in violation of COPPA, Schneiderman said.
“Operation Child Tracker” is a “first-of-its-kind investigation” by the attorney general's office, he said.
Allison Fitzpatrick, a partner at Davis & Gilbert LLP in New York whose practice includes advertising and marketing privacy issues, told Bloomberg BNA Sept. 13 that this action is noteworthy because Schneiderman, and not the FTC initiated the action, as “the FTC has been the primary enforcer of COPPA.”
According to Fitzpatrick, “in light of this action, it is likely other state attorneys general may being to exert their COPPA authority on a more regular basis.” This probably won't be Schneiderman's last COPPA action, she said. It is clear from Schneiderman's announcement that he is “disturbed by the amount of behavioral tracking taking place on child-directed sites—and even mixed-audience pages—in violation of COPPA,” Fitzpatrick said.
Companies that target children should “review their privacy practices more closely to ensure that any third parties on their sites are not improperly tracking children,” she said.
Mattel is the world's largest toy and games manufacturer with a $10.88 billion market capitalization, Hasbro is the third largest toy and games manufacturer with a $10.03 billion market capitalization and Viacom is the seventh largest entertainment content company in North America with a $15.33 billion capitalization, Bloomberg data show.
Viacom, Hasbro, Mattel and JumpStart Games operate some of the most popular children's websites, including websites for Nickelodeon and Nick Jr., Barbie, Hot Wheels, American Girl, Neopets, My Little Pony, Littlest Pet Shop and Nerf.
According to Schneiderman, Viacom will pay $500,000, Mattel will pay $250,000 and JumpStart will pay $85,000. Hasbro participated in a Federal Trade Commission-approved safe harbor program and won't pay a penalty, the announcement said. A website operator that complies with FTC-approved safe harbor program is deemed COPPA-compliant, it said.
Schneiderman's 2-year investigation found that the companies failed to ensure that their websites directed at children are free of improper third party tracking technologies.
To address these shortcomings, the companies also agreed to implement comprehensive reforms to protect children, including regular electronic scanning for third party tracking technologies, adopting procedures to vet third parties' data collection practices and providing notice to third parties when they are operating through a website covered by COPPA, the announcement said. Each of the companies cooperated in “Operation Child Tracker” and took remedial measures after being contacted by Schneiderman's office, the announcement said.
By Jimmy H. Koo
To contact the reporter on this story: Jimmy H. Koo in Washington at firstname.lastname@example.org
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