Children’s app developer settles COPPA allegations with FTC

On June 2, 2020, the Federal Trade Commission announced a settlement with HyperBeard, Inc, along with its chief executive officer and managing director, related to allegations that HyperBeard violated (1) the Children’s Online Privacy Protection Act Rule by permitting children’s personal information to be collected from the company’s applications without notifying or obtaining the consent of the children’s parents and (2) Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce.

HyperBeard is a California corporation that advertises, markets and distributes mobile apps, some of which are directed to children.  According to the FTC, HyperBeard allowed third-party advertising networks to collect children’s personal information through these children’s apps, in the form of persistent identifiers that help target advertising.  HyperBeard did not inform the third-party advertising networks that the children’s apps were in fact directed toward children, did not require the networks to refrain from behavioral advertising, and did not provide notification or obtain parental consent as required by the COPPA Rule.

The FTC settlement imposes a $4 million civil penalty on HyperBeard and the two individual defendants, but suspends all but $150,000 of the penalty due to the financial condition of the defendants.  The settlement also a compliance program that, among other things:  (1) requires HyberBeard to destroy children’s personal information already in its possession; (2) enjoins the company and its officers, agents and employees from failing to take reasonable measures to ensure that parents of child app users receive direct notice of the company’s data collection, use and disclosure practices, and from failing to obtain verifiable parental consent before any children’s personal information is collected, used or disclosed; (3) requires that HyperBeard provide notice of the settlement terms, and obtain acknowledgment thereof, from principals, officers, directors, and managers for the next five years, and submit certification of compliance; and (4) cooperate with the FTC in any future investigation of the company’s compliance.

The settlement and accompanying complaint were filed in the US District Court for the Northern District of California; the settlement must be approved by the court before it takes effect. 

FTC press release | Complaint | Consent order 

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