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"Earlier this week, the Federal Trade Commission (FTC) announced a settlement with mobile app developer W3 Innovations, LLC. (W3) and its president, Justin Maples, over alleged children\u2019s privacy violations. The FTC action was intended to send a message to the mobile app market that it will be closely monitoring the industry for business practices that violate consumer protection law, including privacy restrictions. \nWhile the case marks the FTC\u2019s first enforcement action against a mobile app developer, it won\u2019t be the last. Earlier this year, Jessica Rich, deputy director of the FTC's Bureau of Consumer Protection testified to Congress that the agency has \u201Ca number of active investigations into privacy issues associated with mobile devices, including children\u2019s privacy.\"  \nIf you\u2019re in the business, and your mobile app fails to identify and comply with laws regarding privacy and disclosure requirements, your company might find itself defending an investigation by the FTC. Not only does that situation involve heavy cost, but an investigation will put your business and its reputation at risk. \nFurthermore, if your app either intentionally targets or is attractive to kids, the FTC is even more likely to scrutinize. A recent report finds that games and social networking activities \u2014 both hugely popular with kids \u2014 comprise two of the three most popular mobile app categories. The market is expected to reach $3.8 billion by the end of 2011. As more developers position their apps to capture a piece of the pie, the settlement with W3 warns that a casual approach to legal compliance can mean downfall. \nFTC Takes Issue With W3 App\u2019s Collection of Children\u2019s Information\nBetter known as Broken Thumbs Apps, W3 creates and sells the popular \u201CEmily Apps,\u201D including Emily\u2019s Girl World and Emily\u2019s Runway High Fashion. Both were available through the \u201CGames-Kids\u201D section of Apple\u2019s App Store. The apps encouraged children to send emails to \u201CEmily\u201D that included shout-outs to friends, pet photographs and requests for advice. According to the FTC, the emails were then posted as public entries to \u201CEmily\u2019s blog,\u201D accessible through all of the Emily App sites. Children also could submit responses to the blog entries using a standardized comment form that required them to release their names and email addresses.  \nThe FTC alleged that the Emily Apps features violated the Children\u2019s Online Privacy Protection Act (COPPA) because the personal information of children under age 13 was collected without parental consent. The rule has two key requirements:\n\nDon\u2019t Overlook the Privacy Policy: You must prominently post a privacy policy on your homepage, as well as anywhere on your site or app where you collect information from kids. The privacy policy must clearly explain the type of information, how it\u2019s collected, how it\u2019s used, whether the information is disclosed to third parties, and the procedures parents can take to refuse, review or remove their children\u2019s information from the site.\nParental Consent is Key: You must notify parents and get their consent before you collect, use or disclose a child\u2019s personal information.\n\nFair warning: even if you don\u2019t think your app targets kids, the FTC may still determine a general audience app is subject to these requirements if the app is used by a significant number of children.\nApp Developer Enters 20-Year FTC Settlement \nThe FTC has a range of tools to address and remedy practices that violate privacy and other consumer protection laws. In the 20-year settlement with W3 and its president, the FTC requires the company to take the following actions:\n\nDelete all personal information that W3 obtained through the Emily Apps\nPay a civil penalty of $50,000\nAvoid future violations of the privacy rule\n\nFor years, the FTC will monitor the app developer and its president, Justin Maples, to confirm they are complying with the settlement. The company will also have to submit records and compliance reports to the FTC for multiple years going forward. If they violate the settlement at any point over the next 20 years, the company could incur additional monetary penalties of up to $16,000 for each violation of a settlement provision.\nW3 is the latest in a growing list of companies in the mobile app space (including Apple, Google and Pandora) to attract unwanted scrutiny over its handling of consumer information. This latest case shows that the issue is escalating, and the failure to address it can be very costly. \nGiven the FTC\u2019s interest, companies seeking to enter the mobile app market or to engage a younger audience via games, for example, should be aware of the key considerations and best practices to help reduce the risk of legal and regulatory scrutiny.\nImage courtesy of iStockphoto, WILLSIE"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2011/08/18/app-children-privacy-ftc/>