Since the beginning of September, we’ve seen the Irish Data Protection Commission issue a huge, €345 million ($367 million) fine against TikTok for using unfair design practices that violate kids’ privacy. Delaware’s governor just signed a new privacy law that bans profiling and targeted advertising for users under the age of 18 unless they opt-in. And the Dutch data protection authority, just this week, announced an investigation into businesses’ use of generative AI in apps directed at young children.

As I was catching up with these matters yesterday, news broke that a federal district court judge in California had granted a preliminary injunction (“PI”) prohibiting the landmark California Age Appropriate Design Code Act (“CAADCA”) from going into effect on July 1, 2024. The judge ruled that the law violates the First Amendment’s free speech guarantees.

As ESRB Privacy Certified blog readers might recall, in September 2022, California enacted the CAADCA, establishing a far-reaching privacy framework that requires businesses to prioritize the “best interests of the child” when designing, developing, and providing online services. At the time, I wrote that the California law had the “potential to transform data privacy protections for children and teens in the United States.”

In particular, I pointed to the law’s coverage of children under the age of 18, its applicability to all online services “likely to be accessed by a minor,” and its requirement that businesses set default privacy settings that offer a “high level” of privacy protection (e.g., turning off geolocation and app tracking settings) unless the business can present a “compelling reason” that different settings are in the best interests of children. I also noted the Act’s provisions on age estimation/verification, data protection impact assessments (“DPIAs”), and data minimization as significant features.

In December 2022, tech industry organization NetChoice filed a lawsuit challenging the CAADCA on a wide range of constitutional and other grounds. In addition to a cluster of First Amendment arguments, NetChoice asserted that the Children’s Online Privacy Protection Act (“COPPA”), which is enforced primarily by the Federal Trade Commission (“FTC”), preempts the California law. The State of California, represented by the Office of the Attorney General, defended the law, arguing that the “Act operates well within constitutional parameters.”

Yesterday’s PI shifts the “atmospherics” of the kids’ privacy landscape dramatically. But the injunction doesn’t mean that businesses and privacy practitioners can ignore the underlying reasons for the CAADCA (which was passed overwhelmingly by the California legislature) or the practices and provisions it contains. Here’s a very rough analysis of the decision and some tips about what it might mean for your kids’ privacy program.

The Court’s Holding: In her 45-page written opinion, Judge Beth Labson Freeman held that “NetChoice has shown that it is likely to succeed on the merits of its argument that the provisions of the CAADCA intended to achieve [the purpose of protecting children when they are online] likely violates the First Amendment.” The Court held that the CAADCA is a regulation of protected expression, and not simply a regulation of non-expressive conduct, i.e., activity without a significant expressive element. Because she viewed the statute as implicating “commercial speech,” the Court analyzed the CAADCA under an “intermediate scrutiny standard of review.”

The Relevant Test: Under that standard (often referred to as the Central Hudson test based on the name of the Supreme Court case that formulated it), if the challenged regulation concerns lawful activity and speech that is not misleading, the government bears the burden of proving that (i) it has a “substantial interest” in the regulation advanced, (ii) that the regulation directly and materially advance the government’s substantial interest, and (iii) that the regulation is “narrowly tailored” to achieve that interest.

The Court recognized that California would likely succeed in establishing a substantial interest in protecting minors from harms to their physical and psychological well-being caused by lax data and privacy protections online. Reviewing the CAADCA’s specific provisions, however, it found that that many of the provisions  challenged by NetChoice did not meet the remaining prongs of the intermediate scrutiny test.

The Court’s Central Hudson Analysis: The Court made findings on each of the specific provisions challenged by NetChoice keyed to the Central Hudson factors. I highlight a few here:

• Data Protection Impact Assessments (DPIAs): The Court held that California did not meet its burden to demonstrate that the requirement for businesses to assess their practices in DPIAs would alleviate any harms from the design of digital products, services, and features, to a material degree.
• Age Estimation: Judge Freeman also found that the statutory requirement to estimate the age of child users with a “reasonable level of certainty” would likely fail the Central Hudson test: “[T]he CAADCA’s age estimation provision appears not only unlikely to materially alleviate the harm of insufficient data and privacy protections for children, but actually likely to exacerbate the problem by inducing covered businesses to require consumers, including children, to divulge additional personal information.”
  • The Court also found that the age estimation provision would likely fail to meet the Central Hudson test because the effect of a business choosing not to estimate age, but instead to apply privacy and data protections broadly, would impermissibly shield adults from that same content. In reaching this conclusion, Judge Freeman rejected California’s argument that the “CAADCA does not prevent any specific content from being displayed to a consumer, even if the consumer is a minor; it only prohibits a business from profiling a minor and using that information to provide targeted content.”
  • Notably, later in the decision, Judge Freeman held that the age estimation provision is the “linchpin” of most of most of the CAADCA’s provisions and therefore determined it is not “functionally severable” from the remainder of the statute.
• High Default Privacy Settings: The Court found that the CAADCA’s requirement for “high default privacy settings” would be likely to cause at least some businesses to prohibit children from accessing their services and products altogether.
• Profiling by Default: Here, Judge Freeman held that the provision banning profiling of children by default could discard “beneficial aspects” of targeted information to certain categories of children, e.g., pregnant teenagers.
• Dark Patterns: The Judge held that California did not meet its burden to establish that prohibitions on the use of dark patterns to lead or encourage children to provide unnecessary personal information would ameliorate a causally connected harm.

COPPA Preemption: Although the Court granted the injunction based on First Amendment considerations alone, it did, briefly, address NetChoice’s argument that the COPPA preempts the CAADCA. The Court rejected this argument at the PI stage, explaining: “In the Court’s view, it is not clear that the cited provisions of the CAADCA contradict, rather than supplement, those of COPPA. Nor is it clear that the cited provisions of the CAADCA would stand as an obstacle to enforcement of COPPA. An online provider might well be able to comply with the provisions of both the CAADCA and COPPA . . . . “

• N.B. Judge Freeman’s decision to act cautiously on this claim makes sense. Recently, the Ninth Circuit Court of Appeals, in Google v. Jones, overturned her decision that COPPA preempted state law claims asserted in a class action alleging that Google/You Tube used persistent identifiers to collect data and track children’s online behavior surreptitiously and without their consent – conduct that also violates COPPA. Interestingly, in that case, the Ninth Circuit invited the FTC, which enforces COPPA, to express its views on the preemption issue. The FTC accepted, stating that “Congress did not intend to wholly foreclose state protection of children’s online privacy, and the panel properly rejected an interpretation of COPPA that would achieve that outcome.”

Takeaways: The CAADCA litigation is far from over, and it is likely that the California Attorney General will seek an immediate interlocutory appeal. It is clear, though, that the district court’s decision will have consequences in the short term for state privacy laws that are scheduled to come into effect soon as well as for efforts underway in Congress on child-related online privacy and safety legislation. Here are a few takeaways:

• Privacy Laws Can Still Pack a Punch: Regardless of whether the Court ultimately strikes down the CAADCA or not, many of the concepts in the design code are already embedded in other privacy laws that apply to game and toy companies’ activities, both without and within the United States. On the U.S. front, there are newly enacted child privacy provisions in state laws that should be able to withstand constitutional challenge. Plus, the NetChoice ruling might loosen the California’s Congressional delegation’s resistance to bipartisan federal legislation. Although today’s some may view the Court’s ruling as a reprieve, companies still need to meet other legal obligations.
  • For example, Connecticut recently passed child privacy amendments (scheduled to go into effect on October 1, 2024) to its privacy law that skirt some of the elements Judge Freeman found provisionally unconstitutional. Unlike the CAADCA, the Connecticut law does not require that companies estimate the age of their users; it applies only to companies that have “actual knowledge” of or “willfully disregard” the presence of minor users, and it does not regulate “potentially harmful” (as opposed to illegal) content. Instead of using the CAADCA “best interest of the child” standard, the Connecticut law establishes a duty to avoid a “heightened risk of harm” to minors and delineates potential harms.
• DPIAs are still a “Must Do”: Most of the new state privacy laws passed in the last year contain requirements for data protection impact assessments, similar to those already required by the European Union’s General Data Protection Regulation (GDPR). At the beginning of September, the California Privacy Protection Agency published draft regulations that contain practical examples of how DPIAs should work under California’s comprehensive privacy law. Regardless of what happens with the CAADCA, statutory requirements for more focused DPIAs such as those in the California Consumer Privacy Act will likely remain.
  • Judge Freeman’s skepticism about the CAADCA’s DPIA provision aside, DPIAs can be a useful accountability tool for identifying privacy risks, working out when, where, and how likely they are to occur, and assessing the impact of such risks on your customers and business.
• COPPA Continues to Be Relevant: It will probably take years for the court battle over the CAADCA to play out. In the meantime, if you know that children — or teenagers — are using your products, expect the FTC to enforce COPPA and other privacy protections aggressively. (For quick review of the FTC’s recent COPPA cases, see my previous blog post COPPA Battlegrounds: The Quest to Uncover the Secrets of the FTC’s Kids’ Privacy Actions.)
  • Indeed, it’s likely the FTC will use both the substantive provisions of COPPA and the “unfairness” and “deception” prongs of Section 5 of the FTC Act to set requirements for child-friendly privacy disclosures, mandates for high privacy default settings, and prohibitions against manipulative dark patterns through its child-focused investigations and enforcement actions.
  • The NetChoice ruling – coupled with Congressional inaction – could also spur the FTC to complete its now-four-years-old COPPA Rule review and act on (at least parts of) last year’s privacy rulemaking proposal.

While this all unfolds, ESRB Privacy Certified will continue to help its program members comply with existing laws and adopt and implement best practices for children’s privacy. As privacy protections for kids and teens continue to evolve, we’ll be following closely and providing guidance to our program members on all of the moving parts of the complex children’s privacy landscape. To learn more about ESRB Privacy Certified’s compliance and certification program, please visit our website, find us on LinkedIn, or contact us at privacy@esrb.org.

• • •

As senior vice president of ESRB Privacy Certified (EPC), Stacy Feuer ensures that member companies in the video game and toy industries adopt and maintain lawful, transparent, and responsible data collection and privacy policies and practices for their websites, mobile apps, and online services. She oversees compliance with ESRB’s privacy certifications, including its “Kids Certified” seal, which is an approved Safe Harbor program under the Federal Trade Commission’s Children’s Online Privacy Protection Act (COPPA) Rule.

The post A New Season for Kids’ Privacy: Court enjoins California’s Landmark Youth Privacy — Protecting Children Online Remains a Prime Concern appeared first on ESRB Ratings.

Since the beginning of September, we’ve seen the Irish Data Protection Commission issue a huge, €345 million ($367 million) fine against TikTok for using unfair design practices that violate kids’ privacy. Delaware’s governor just signed a new privacy law that bans profiling and targeted advertising for users under the age of 18 unless they opt-in. And the Dutch data protection authority, just this week, announced an investigation into businesses’ use of generative AI in apps directed at young children.

As I was catching up with these matters yesterday, news broke that a federal district court judge in California had granted a preliminary injunction (“PI”) prohibiting the landmark California Age Appropriate Design Code Act (“CAADCA”) from going into effect on July 1, 2024. The judge ruled that the law violates the First Amendment’s free speech guarantees.

As ESRB Privacy Certified blog readers might recall, in September 2022, California enacted the CAADCA, establishing a far-reaching privacy framework that requires businesses to prioritize the “best interests of the child” when designing, developing, and providing online services. At the time, I wrote that the California law had the “potential to transform data privacy protections for children and teens in the United States.”

In particular, I pointed to the law’s coverage of children under the age of 18, its applicability to all online services “likely to be accessed by a minor,” and its requirement that businesses set default privacy settings that offer a “high level” of privacy protection (e.g., turning off geolocation and app tracking settings) unless the business can present a “compelling reason” that different settings are in the best interests of children. I also noted the Act’s provisions on age estimation/verification, data protection impact assessments (“DPIAs”), and data minimization as significant features.

In December 2022, tech industry organization NetChoice filed a lawsuit challenging the CAADCA on a wide range of constitutional and other grounds. In addition to a cluster of First Amendment arguments, NetChoice asserted that the Children’s Online Privacy Protection Act (“COPPA”), which is enforced primarily by the Federal Trade Commission (“FTC”), preempts the California law. The State of California, represented by the Office of the Attorney General, defended the law, arguing that the “Act operates well within constitutional parameters.”

Yesterday’s PI shifts the “atmospherics” of the kids’ privacy landscape dramatically. But the injunction doesn’t mean that businesses and privacy practitioners can ignore the underlying reasons for the CAADCA (which was passed overwhelmingly by the California legislature) or the practices and provisions it contains. Here’s a very rough analysis of the decision and some tips about what it might mean for your kids’ privacy program.

The Court’s Holding: In her 45-page written opinion, Judge Beth Labson Freeman held that “NetChoice has shown that it is likely to succeed on the merits of its argument that the provisions of the CAADCA intended to achieve [the purpose of protecting children when they are online] likely violates the First Amendment.” The Court held that the CAADCA is a regulation of protected expression, and not simply a regulation of non-expressive conduct, i.e., activity without a significant expressive element. Because she viewed the statute as implicating “commercial speech,” the Court analyzed the CAADCA under an “intermediate scrutiny standard of review.”

The Relevant Test: Under that standard (often referred to as the Central Hudson test based on the name of the Supreme Court case that formulated it), if the challenged regulation concerns lawful activity and speech that is not misleading, the government bears the burden of proving that (i) it has a “substantial interest” in the regulation advanced, (ii) that the regulation directly and materially advance the government’s substantial interest, and (iii) that the regulation is “narrowly tailored” to achieve that interest.

The Court recognized that California would likely succeed in establishing a substantial interest in protecting minors from harms to their physical and psychological well-being caused by lax data and privacy protections online. Reviewing the CAADCA’s specific provisions, however, it found that that many of the provisions  challenged by NetChoice did not meet the remaining prongs of the intermediate scrutiny test.

The Court’s Central Hudson Analysis: The Court made findings on each of the specific provisions challenged by NetChoice keyed to the Central Hudson factors. I highlight a few here:

• Data Protection Impact Assessments (DPIAs): The Court held that California did not meet its burden to demonstrate that the requirement for businesses to assess their practices in DPIAs would alleviate any harms from the design of digital products, services, and features, to a material degree.
• Age Estimation: Judge Freeman also found that the statutory requirement to estimate the age of child users with a “reasonable level of certainty” would likely fail the Central Hudson test: “[T]he CAADCA’s age estimation provision appears not only unlikely to materially alleviate the harm of insufficient data and privacy protections for children, but actually likely to exacerbate the problem by inducing covered businesses to require consumers, including children, to divulge additional personal information.”
  • The Court also found that the age estimation provision would likely fail to meet the Central Hudson test because the effect of a business choosing not to estimate age, but instead to apply privacy and data protections broadly, would impermissibly shield adults from that same content. In reaching this conclusion, Judge Freeman rejected California’s argument that the “CAADCA does not prevent any specific content from being displayed to a consumer, even if the consumer is a minor; it only prohibits a business from profiling a minor and using that information to provide targeted content.”
  • Notably, later in the decision, Judge Freeman held that the age estimation provision is the “linchpin” of most of most of the CAADCA’s provisions and therefore determined it is not “functionally severable” from the remainder of the statute.
• High Default Privacy Settings: The Court found that the CAADCA’s requirement for “high default privacy settings” would be likely to cause at least some businesses to prohibit children from accessing their services and products altogether.
• Profiling by Default: Here, Judge Freeman held that the provision banning profiling of children by default could discard “beneficial aspects” of targeted information to certain categories of children, e.g., pregnant teenagers.
• Dark Patterns: The Judge held that California did not meet its burden to establish that prohibitions on the use of dark patterns to lead or encourage children to provide unnecessary personal information would ameliorate a causally connected harm.

COPPA Preemption: Although the Court granted the injunction based on First Amendment considerations alone, it did, briefly, address NetChoice’s argument that the COPPA preempts the CAADCA. The Court rejected this argument at the PI stage, explaining: “In the Court’s view, it is not clear that the cited provisions of the CAADCA contradict, rather than supplement, those of COPPA. Nor is it clear that the cited provisions of the CAADCA would stand as an obstacle to enforcement of COPPA. An online provider might well be able to comply with the provisions of both the CAADCA and COPPA . . . . “

• N.B. Judge Freeman’s decision to act cautiously on this claim makes sense. Recently, the Ninth Circuit Court of Appeals, in Google v. Jones, overturned her decision that COPPA preempted state law claims asserted in a class action alleging that Google/You Tube used persistent identifiers to collect data and track children’s online behavior surreptitiously and without their consent – conduct that also violates COPPA. Interestingly, in that case, the Ninth Circuit invited the FTC, which enforces COPPA, to express its views on the preemption issue. The FTC accepted, stating that “Congress did not intend to wholly foreclose state protection of children’s online privacy, and the panel properly rejected an interpretation of COPPA that would achieve that outcome.”

Takeaways: The CAADCA litigation is far from over, and it is likely that the California Attorney General will seek an immediate interlocutory appeal. It is clear, though, that the district court’s decision will have consequences in the short term for state privacy laws that are scheduled to come into effect soon as well as for efforts underway in Congress on child-related online privacy and safety legislation. Here are a few takeaways:

• Privacy Laws Can Still Pack a Punch: Regardless of whether the Court ultimately strikes down the CAADCA or not, many of the concepts in the design code are already embedded in other privacy laws that apply to game and toy companies’ activities, both without and within the United States. On the U.S. front, there are newly enacted child privacy provisions in state laws that should be able to withstand constitutional challenge. Plus, the NetChoice ruling might loosen the California’s Congressional delegation’s resistance to bipartisan federal legislation. Although today’s some may view the Court’s ruling as a reprieve, companies still need to meet other legal obligations.
  • For example, Connecticut recently passed child privacy amendments (scheduled to go into effect on October 1, 2024) to its privacy law that skirt some of the elements Judge Freeman found provisionally unconstitutional. Unlike the CAADCA, the Connecticut law does not require that companies estimate the age of their users; it applies only to companies that have “actual knowledge” of or “willfully disregard” the presence of minor users, and it does not regulate “potentially harmful” (as opposed to illegal) content. Instead of using the CAADCA “best interest of the child” standard, the Connecticut law establishes a duty to avoid a “heightened risk of harm” to minors and delineates potential harms.
• DPIAs are still a “Must Do”: Most of the new state privacy laws passed in the last year contain requirements for data protection impact assessments, similar to those already required by the European Union’s General Data Protection Regulation (GDPR). At the beginning of September, the California Privacy Protection Agency published draft regulations that contain practical examples of how DPIAs should work under California’s comprehensive privacy law. Regardless of what happens with the CAADCA, statutory requirements for more focused DPIAs such as those in the California Consumer Privacy Act will likely remain.
  • Judge Freeman’s skepticism about the CAADCA’s DPIA provision aside, DPIAs can be a useful accountability tool for identifying privacy risks, working out when, where, and how likely they are to occur, and assessing the impact of such risks on your customers and business.
• COPPA Continues to Be Relevant: It will probably take years for the court battle over the CAADCA to play out. In the meantime, if you know that children — or teenagers — are using your products, expect the FTC to enforce COPPA and other privacy protections aggressively. (For quick review of the FTC’s recent COPPA cases, see my previous blog post COPPA Battlegrounds: The Quest to Uncover the Secrets of the FTC’s Kids’ Privacy Actions.)
  • Indeed, it’s likely the FTC will use both the substantive provisions of COPPA and the “unfairness” and “deception” prongs of Section 5 of the FTC Act to set requirements for child-friendly privacy disclosures, mandates for high privacy default settings, and prohibitions against manipulative dark patterns through its child-focused investigations and enforcement actions.
  • The NetChoice ruling – coupled with Congressional inaction – could also spur the FTC to complete its now-four-years-old COPPA Rule review and act on (at least parts of) last year’s privacy rulemaking proposal.

While this all unfolds, ESRB Privacy Certified will continue to help its program members comply with existing laws and adopt and implement best practices for children’s privacy. As privacy protections for kids and teens continue to evolve, we’ll be following closely and providing guidance to our program members on all of the moving parts of the complex children’s privacy landscape. To learn more about ESRB Privacy Certified’s compliance and certification program, please visit our website, find us on LinkedIn, or contact us at privacy@esrb.org.

• • •

As senior vice president of ESRB Privacy Certified (EPC), Stacy Feuer ensures that member companies in the video game and toy industries adopt and maintain lawful, transparent, and responsible data collection and privacy policies and practices for their websites, mobile apps, and online services. She oversees compliance with ESRB’s privacy certifications, including its “Kids Certified” seal, which is an approved Safe Harbor program under the Federal Trade Commission’s Children’s Online Privacy Protection Act (COPPA) Rule.

The post A New Season for Kids’ Privacy: Court enjoins California’s Landmark Youth Privacy — Protecting Children Online Remains a Prime Concern appeared first on ESRB Ratings.

Feuer brings more than two decades of experience in consumer protection and privacy policy and enforcement to the ESRB. In her past role as the Assistant Director for International Consumer Protection at the Federal Trade Commission (FTC), she represented the U.S. and the FTC internationally on consumer-related advertising, marketing, and data privacy issues involving new and emerging digital technologies. She also investigated and litigated advertising cases and coordinated the FTC’s work on the U.S. SAFE WEB Act, legislation that enhances the FTC’s cross-border cooperation powers.

“The ESRB Privacy Certified program continues to set a high bar with its self-regulatory standards and commitment to best practices,” said Feuer. “As a result, consumers, parents, and caregivers can be assured that their and their children’s personal data will be protected whenever they see Privacy Certified seals displayed. I am thrilled to join ESRB at this pivotal moment for data privacy to help Privacy Certified members meet ongoing and future compliance challenges creatively.”

“Stacy’s deep expertise in navigating the domestic and global regulatory landscape for privacy, consumer protection and e-commerce makes her a perfect choice to lead the Privacy Certified program,” said ESRB President Patricia Vance. “Stacy will bring enormous value to our member companies, helping guide them on compliance with an ever-increasingly complex array of consumer privacy regulations on the state, federal and global levels.”

Before joining the FTC, Stacy practiced international law at a Washington, DC firm, and served as a law clerk for a federal district court judge. Stacy graduated from Cornell University and the New York University School of Law. She holds a CIPP-US accreditation from the International Association of Privacy Professionals.

About ESRB

The ESRB is a non-profit, self-regulatory body that independently assigns age and content ratings for video games and mobile apps so parents can make informed choices. It also enforces advertising guidelines adopted by the video game industry and helps companies implement responsible online, mobile and internet connected device privacy practices under its Privacy Certified program. Visit www.esrb.org for more information.

About Privacy Certified

ESRB’s Privacy Certified program, an authorized Safe Harbor under the Children’s Online Privacy Protection Act (COPPA), helps companies comply with online and mobile privacy protection laws in the United States and beyond. Privacy Certified protects consumer privacy and is consistent with ESRB’s mission to help interactive entertainment companies conduct business responsibly while assuring consumers, especially parents, that their personal data is collected and managed responsibly. Look for the Privacy Certified seal. For more information, visit esrb.org/privacy.

Contact:

Johner Riehl
858.220.5626
johner@zebrapartners.net

The post Former FTC Regulator Stacy Feuer Joins ESRB as Senior Vice President, Privacy Certified appeared first on ESRB Ratings.

“A generation from now, I believe we will look back and find it peculiar that online services weren’t always designed with children in mind. When my grandchildren are grown and have children of their own, the need to keep children safer online will be as second nature as the need to ensure they eat healthy, get a good education or buckle up in the back of a car.”
– Information Commissioner Elizabeth Denham

In May 2018, the European Union’s General Data Protection Regulation (GDPR) went into effect, recognizing for the first time within the European Union (EU) that children’s personal data warrants special protection. The United Kingdom’s Data Protection Act 2018 adopted GDPR within the United Kingdom and, among other things, charged the Information Commissioner’s Office (ICO) with developing a code of practice to protect children’s personal data online. The result is the Age Appropriate Design Code (also referred to as the Children’s Code), an ambitious attempt to childproof the digital world.

The Internet was not built with children in mind, yet children are prolific users of the Internet. The Children’s Code, which is comprised of fifteen “Standards,” seeks to correct that incongruity by requiring online services that children are likely to use to be designed with their best interests in mind.

For over the last twenty years, the U.S. Children’s Online Privacy Protection Act (COPPA) has been the primary source of protection for children’s privacy online. COPPA protects the privacy of internet users under 13 years old, primarily by requiring informed, verifiable consent from a parent or guardian. The Children’s Code, however, has much grander aspirations. It protects all children under 18 years old, asking companies to reimagine their online services from the bottom up.

The foundational principle of the Children’s Code calls for online services likely to be accessed by children under 18 years old to be designed and developed with the best interests of the child as a primary consideration. The Children’s Code is grounded in the United Nations Convention on the Rights of the Child (UNRC), which recognizes that children have several rights, including the rights to privacy and to be free from economic exploitation; to access information; to associate with others and play; and to have a voice in matters that affect them.

To meet the best interests of the child, online services must comply with each of the applicable fifteen Standards. Those Standards are distilled below.

1. Assessing and Mitigating Risks
Compliance with the Children’s Code begins with a Data Protection Impact Assessment (DPIA), a roadmap to compliance and a requirement for all online services that are likely to be accessed by children under 18 years old. The DPIA must identify the risks the online service poses to children, the ways in which the online service mitigates those risks, and how it balances the varying and sometimes competing rights and interests of children of different age groups. If the ICO conducts an audit of an online service or investigates a consumer complaint, the DPIA will be among the first documents requested.
The ICO suggests involving experts and consulting research to help with this process. This might not be feasible for all companies. At a minimum, however, small- and medium-sized companies with online services that create risks to children will be expected to keep up to date with resources that are publicly available. More will be expected of larger companies.
While the Internet cannot exist without commercial interests, the primary consideration must be the best interests of the child. If there is a conflict between the commercial interests of an online service and the child’s interests, the child’s interests must prevail.

2. Achieving Risk-Proportionate Age Assurance
To adequately assess and mitigate risk, an online service must have a level of confidence in the age range(s) of its users that is proportionate to the risks posed by the online service. The greater the risk, the more confidence the online service must have.
The ICO identifies several options to obtain what it calls “age assurance,” which can be used alone or in combination depending on the circumstances. Age assurance options include self-declaration by users (a/k/a age gates), artificial intelligence (AI), third-party verification services, and hard identifiers (e.g., government IDs). Less reliable options, like age gates, are only permitted in low-risk situations or when combined with other age assurance mechanisms.

Achieving an adequate level of confidence will be challenging. The Verification of Children Online (VoCO), a multi-stakeholder child online safety research project led by the U.K.’s Department for Digital, Culture, Media & Sport (DCMS), is attempting to address that challenge. The VoCO Phase 2 Report provided the following potential flow as an example:
[F]or a platform that needs a medium level of confidence, a user could initially declare their age as part of the onboarding process, and alongside this an automated age assurance method (such as using AI analysis) could be used to confirm the declared age. If this measure suggests a different age band than that stated, which reduces confidence in the initial assessment, a request could be made to validate the user’s age through a verified digital parent.

Ultimately, if an online service is unable to reach an appropriate level of confidence, it has two options: 1) take steps to adequately reduce the level of risk; or 2) apply the Children’s Code to all users, even adults.

3. Setting High Privacy by Default
For all children, high privacy must be the default setting. This means an online service may only collect the minimum amount of personal data needed to provide the core or most basic service. Additional, optional elements of the online service, for example to personalize offerings, would have to be individually selected and activated by the child. To illustrate this point, the ICO uses the example of a music download service.

High privacy by default also means that children’s personal information cannot be used in ways that have been shown to be detrimental. Based on specific Standards within the Children’s Code, this means the following must be turned off by default:

• Profiling (for example, behavioral advertising);
• Geolocation tracking;
• Marketing and advertising that does not comply with The Committee of Advertising Practice (CAP) Code in the United Kingdom;
• Sharing children’s personal data; and
• Utilizing nudge techniques that lead children to make poor choices.

To turn these on, the online service must be able to demonstrate a compelling reason and adequate safeguards.

4. Making Online Tools Available
Children must be given the tools to exercise their privacy rights, whether it be opting into optional parts of a service or asking to delete or get access to their personal information. The tools should be highlighted during the start-up process and must be prominently placed on the user’s screen. They must also be tailored to the age ranges of the users that access the online service. The ICO encourages using easily identifiable icons and other age-appropriate mechanisms.

5. Communicating Age-Appropriate Privacy Information
The Children’s Code requires all privacy-related information to be communicated to children in a way they can understand. This includes traditional privacy policies, as well as bite-sized, just-in-time notices. To help achieve this daunting task, the ICO provides age-based guidance. For example, for children 6 to 9 years old, the ICO recommends providing complete privacy disclosures for parents, while explaining the basic concepts to the children. If a child in this age range attempts to change a default setting, the ICO recommends using a prompt to get the child’s attention, explaining what will happen and instructing the child to get a trusted adult. The ICO also encourages the use of cartoons, videos and audio materials to help make the information understandable to children in different age groups and at different stages of development.

For connected toys and devices, the Children’s Code requires notice to be provided at the point of purchase, for example, a disclosure or easily identifiable icon on the packaging of the physical product. Disclosures about the collection and use of personal data should also be provided prior to setup (e.g., in the instructions or a special insert). Anytime a connected device is collecting information, it should be obvious to the user (e.g., a light goes on), and collection should always be avoided when in standby mode.

6. Being Fair
The Children’s Code expects online services to act fairly when processing children’s personal data. In essence, this means online services must say what they do, and do what they say. This edict applies not just to privacy disclosures, but to all published terms, policies and community standards. If, for example, an online service’s community standards prohibit bullying, the failure to enforce that standard could result in a finding that the online service unfairly collected a child’s personal data.

Initial implementation of the Children’s Code will be a challenge. User disruption is inevitable, as are increased compliance and engineering costs. The return on that initial investment, however, will hopefully make it all worthwhile. If Commissioner Denham’s vision is realized, the digital world will become a safe place for children to socialize, create, play, and learn.

• • •

• • •

If you have more questions about the Age Appropriate Design Code or you want to learn more about our Program, please reach out to us through our Contact page to learn more about our program. Be sure to follow us on Twitter and LinkedIn for more privacy-related updates.

The post The UK Age Appropriate Design Code: Childproofing the Digital World appeared first on ESRB Ratings.

App storefronts contain important information about the mobile apps they offer, including:

• The company or individual that is offering or selling the app;
• Whether the app has been updated recently or if it has been months or even years since its last update;
• The permissions the app requires; and
• A link to the app’s privacy policy, which should include a clear explanation of the information the app collects, how that information is used, and how it is shared.

Parents should not skip over this information.

2. Download the App with Your Child

The first time a child opens an app, a number of things might happen.  The child might be asked to give the app various permissions, agree to a privacy policy and terms of service, provide age information, and possibly create an account.  Parents should be part of this process.

3. Review the App’s Privacy Policy

No one expects parents to review every word of a privacy policy, but they should look through them for some key information.  Most importantly, many privacy policies specifically identify how the app developer treats children’s information.  Run a search for the words “child” and “kid,” which should help you identify any sections of the privacy policy that specifically address how children’s information is handled.  If the privacy policy says the app is not intended for children under 13 years old, this means it likely does not abide by restrictions required by the Children’s Online Privacy Protection Act, which is a federal law intended to protect the online privacy of children under 13.

4. Enter Accurate Age Information

Many apps that are intended for children ask for age information.  Be sure your child’s correct age is entered.  Apps may utilize this information to determine how to treat your child’s information.  For example, under U.S. law, children under 13 are entitled to additional privacy protections.  Specifically, if your child is under 13, the app developer must either restrict the information it collects from your child or provide you with notice and get your consent before it collects the information.  If, however, you or your child enter an age of 13+, the app will treat your child as an adult from a privacy standpoint.  This means the app will collect and use your child’s information the same way it would collect and use your information.  It may also activate features of the app that are only available to users 13 and over, such as chat and account creation.

5. Look for a Safe Harbor Seal

The Privacy Certified Kids Seal.

The Children’s Online Privacy Protection Act empowers the Federal Trade Commission to designate Safe Harbor providers to certify that apps (and other online services, like websites) meet the requirements of the law.  This means an independent third party has already taken the time to vet the app from a privacy standpoint.  ESRB is one of the approved Safe Harbors, and we take our responsibility very seriously.  If you see our Privacy Certified Kids Seal, you can feel confident your children’s privacy will be protected.

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FTC Sets COPPA Record, Then Breaks It
The FTC remains the world’s top cop when it comes to children’s privacy. It began 2019 by breaking the record for the largest monetary penalty in a COPPA case when it agreed to a settlement with the operators of TikTok (f/k/a Musical.ly) for $5.7 million. TikTok demonstrated a more aggressive approach both in how the FTC defines an online service “directed to children” and also in how it applies COPPA’s “actual knowledge” standard.

The record set in TikTok, however, did not last long. In September 2019, the FTC and the New York Attorney General announced a COPPA settlement with Google and YouTube, which included a $136 million penalty paid to the FTC and $34 million penalty paid to New York—either of which on its own would have been the largest ever monetary penalty in a COPPA case by a significant margin.

More significantly, the settlement required YouTube to materially change its business. Going forward, all YouTube channel owners must specify whether their channels are directed to children. If a channel is not child-directed, the channel owner must still identify individual videos that are child-directed. When content is identified as child-directed, YouTube turns off several features of the platform, including (i) the collection of personal data for behavioral advertising, and (ii) the ability for users to leave public comments.

The FTC also settled a third COPPA case in 2019 against the operators of i-Dressup.com, a dress-up website that had already been shut down. While that case settled for the relatively modest sum of $35,000, it has important symbolic value insofar as it shows even small companies can land on the FTC’s radar.

FTC Solicits COPPA Comments
In addition to its enforcement activities, the FTC was extremely busy in 2019 soliciting public comments on its application of the COPPA Rule and hosting a COPPA workshop. The request for comments, which was published in July 2019, surprised the privacy community and industry because it occurred three years before the FTC’s typical 10-year cycle. The FTC received over 175,000 submissions by the December deadline, including one submission from us.

U.S. Lawmakers Seek to Update COPPA
In March 2019, Senators Markey and Hawley introduced what became known as COPPA 2.0. The bill would, among other things:

•Extend COPPA protections to minors 13 to 15 years old;
•Extend COPPA to operators of online services that have “constructive knowledge” they are collecting personal information from children or minors; and
•Prohibit the use of children’s personal information for targeted marketing and place limits on the use of minors’ personal information for that purpose.

(Bonus material: In January 2020, lawmakers introduced two bills that would amend COPPA: The Protect Kids Act, which was introduced by Congressmen Tim Walberg and Bobby Rush, would, among other things, extend COPPA’s protections to all children under 16 years old. The PRIVCY Act, introduced by Congresswoman Kathy Castor, would essentially re-write COPPA. Among other things, it would extend protections to children under 18 years old and remove the concept of “child-directed” online services in favor of an “actual and constructive knowledge” standard.)

Outside the U.S., the ICO is Trying to Re-Define How Online Services Approach Children’s Privacy
In 2019, the ICO released its long-awaited proposal for an Age Appropriate Design Code—a set of 15 “standards” aimed at placing the best interests of the child above all other considerations for online services “likely to be accessed” by children under 18 years old. The standards would require, among other things, high-privacy default settings, communicating privacy disclosures and choices in ways that are appropriate to the ages of the children likely to access the online service, and eliminating uses detrimental to children’s wellbeing.

Following the initial consultation period, in November 2019, the ICO revised the Code and submitted the final version to the Secretary of State. The Code now awaits approval by Parliament.

Storefronts Take Steps to Strengthen Children’s Privacy
Apple and Google Play also took steps to strengthen children’s privacy. In May 2019, for example, the FTC announced Apple and Google Play removed three dating apps from their storefronts after the FTC warned the apps were violating COPPA.

In addition, both Apple and Google Play revised their developer policies. On Google Play, developers must now identify the target audience for each of their apps. Apps targeted to children have certain restrictions, including with respect to the types of adverts served and networks used. For its part, Apple has placed restrictions on the use of third-party analytics and advertising in apps directed to children.

• • •

Have more questions about recent developments in the area of children’s privacy? Feel free to reach out to us through our Contact page to learn more about our program. Be sure to follow us on Twitter and LinkedIn for more privacy-related updates.

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The Standards set forth in the final version of the Code are largely unchanged from the initial draft in April. However, after a long consultation period, the final version of the Code does reflect some important compromises by the ICO.

First, while the ICO makes clear that compliance with the Standards will be required, it has clarified that the additional 100+ pages of guidance in the Code is just that, guidance. Companies will have some flexibility to come up with their own methods to comply with the Standards. That said, companies would be shortsighted not to give proper weight to the ICO’s guidance.

Second, the initial draft of the Code essentially placed the burden on companies to prove their online products and services were not likely to be accessed by children. In the final version, the ICO clarifies that the analysis will likely depend on:

• the nature and content of the service and whether [it] has particular appeal for children; and
• the way in which the service is accessed and any measures [the company] put[s] in place to prevent children gaining access.

These factors allow companies far more flexibility than the presumptive approach taken in the initial draft, which will hopefully reduce the amount of unnecessary data collection done solely to confirm a user’s age.

Third, and related, the final version of the Code takes a risk-based, proportionate approach to age verification. Whether and how a company verifies a user’s age will depend on (i) the age range(s) of the users; (ii) the level of certainty the company has about the age range(s); and (iii) the risks the online products and services pose to those users. Under certain low-risk circumstances, for example, a traditional age gate, where a user’s self-declared age is accepted without verification, might be appropriate. In contrast, the initial draft of the Code seemingly banned traditional age gates, which would have required companies to employ more intrusive verification methods.

The Code still has some final hurdles to overcome, including approval by Parliament, and will begin with a 12-month transition period. Companies, however, will likely need all that time, and possibly more!

• • •

Have more questions about the Age Appropriate Design Code? Feel free to reach out to us through our Contact page to learn more about our program. Be sure to follow us on Twitter and LinkedIn for more privacy-related updates.

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Taking a step back, COPPA is triggered when either:

To determine whether an online service is directed to Children, the FTC considers “its subject matter, visual content, use of animated characters or child-oriented activities and incentives, music or other audio content, age of models, presence of child celebrities who appeal to children, language or other characteristics . . . , as well as whether the advertising promoting or appearing . . . is directed to children” and “empirical evidence.” These factors are considered in their totality.

Too often we have heard the argument that an ESRB age rating, specifically an E or E10+ rating means a game or app is directed to Children. As we did in our comments to the FTC, we write now to dispel that fallacy.

The ESRB E (Everyone) rating indicates the content of a game or app is generally suitable for all ages, and may contain minimal cartoon, fantasy or mild violence, or infrequent use of mild language. The ESRB E10+ (Everyone 10+) rating indicates the content is generally suitable for ages 10 and up, and may contain more cartoon, fantasy or mild violence, or minimal suggestive themes. Neither of these ratings, nor any of the other age ratings assigned by ESRB, however, indicate that a game or app is directed to Children for purposes of COPPA.

Indeed, ESRB rates numerous games and apps E or E10+ that are directed to a general or older audience. These include, for example, travel apps, maps and navigation apps, ride-sharing apps, sports news and entertainment apps, retailer apps, card games, puzzle games, flight simulators, and many others. Although those online services do not contain content that would be inappropriate for Children, and indeed in some cases many Children do use them, no one would argue they are directed to Children for purposes of COPPA.

To be clear, when assigning ratings, ESRB does not consider the intended or even actual audience of a video game or mobile app. Nor does ESRB directly consider any of the factors the FTC weighs under COPPA. Rather, when assigning age rating information, ESRB considers the presence, type, degree, and context of violence, blood, gore, language, suggestive themes, crude humor, simulated or actual gambling, drugs, alcohol, tobacco, nudity, and sexual content that may be included in a game or mobile app. ESRB’s Ratings Guide makes this abundantly clear.

Simply put, ESRB’s E and E10+ rating categories are not evidence an online service is directed to Children.

ESRB Privacy Certified is a privacy-focused compliance and certification program. We work with our member companies to navigate these sometimes-difficult issues, including to identify online service that are “directed to Children” for purposes of COPPA and to ensure those services comply with COPPA’s requirements. If you have any questions about our program, please reach out to us at privacy@esrb.org.

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