Children’s App Developer Becomes the Latest Company to Settle with the FTC over the COPPA Violations

The developer of mobile apps HyperBeard became the latest company to settle with the Federal Trade Commission over alleged violations of the Children’s Online Privacy Protection Act (COPPA).  Many of the apps HyperBeard offers are directed to children and contain brightly colored, animated characters.  For example, users of these apps can pet, groom, feed, and dress virtual animals.

The COPPA requires that online services directed to children and wishing to collect covered information about them must publicly disclose their collection practices; provide direct notice to parents; and obtain verifiable parental consent for the collection, use, or disclosure of the information.

According to the Complaint filed by the FTC, HyperBeard allowed third-party ad networks to collect information (in the form of persistent identifiers)from the users of its child-directed apps, and those networks in turn served those users (presumably children) with behavioral advertisements using the information collected. HyperBeard permitted that collection without disclosing it or obtaining verifiable parental consent.

The settlement includes a penalty of $4 million, but it will be suspended upon the payment of $150,000 due to the company’s “inability to pay the full amount.”  HyperBeard would also be required to notify and obtain verifiable consent from parents for any child-directed app that collects personal information from children under 13.  The company would also be prohibited from using or benefitting from personal data collected from children and would be required to delete such data.

The HyperBeard settlement is the latest in the string of high-profile COPPA cases pursued by the FTC.  Last year, Google and Youtube agreed to pay $170 million to resolve the allegations by the FTC and the New York Attorney General that Youtube illegally collected personal information from children without parental consent.

Last year, the FTC also entered into a consent order with Musical.ly (which subsequently merged into TikTok) where the company agreed to pay $5.7 million to settle allegations of the alleged COPPA violations. As we reported last week, the lawmakers are now urging the FTC to open an investigation into allegations that TikTok violated that consent order.

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