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Privacy – Web Sites Directed at Children/Consumer Protection/Risk Management
May 5, 2002
Consumers think of privacy in terms of (1) the security of the data they leave with your web site, and (2) whether you will resell or use their data in ways that affect their right to privacy. Consumers perceptions could materially effect their willingness to do business with you.
Government traditionally considers consumer protection to be one of its legislative obligations. Consumers have come to expect this protection. Governments protect consumers located in their respective legal jurisdictions, regardless of where the offer of goods and services is coming from. It is unlikely that a foreign web site could escape protection for activities directed at local consumers (although it may be able to avoid the application of the law for practical reasons based on geography).
Canadian web sites generally look to the United States and its vastly larger marketplace for sufficient customers to make the web site profitable. Canadian companies can expect to come to the attention of US regulators if they are active in the US market.
Avoiding unwanted prosecution and at the same time giving your customers a sense of safety in dealing with you makes sound business sense.
The Federal Trade Commission in the US prohibits the collection of data (for any purpose) from children under the age of 13 years, without express parental consent – the Children’s Online Privacy Protection Act (COPPA).
In April, 2002, the Ohio Art Company, makers of the toy “Etch-A-Sketch were fined US$35,000 for failing to comply with FTC rules. A further 50 warning letters were sent out to other offenders. The FTC has an ongoing project in place to monitor web sites for compliance with FTC privacy rules.
In its original form, COPPA mandated a verification system that was too costly for the majority of web sites, and resulted in most web sites declining to accept information from children under 13. The FTC recently announced an extension to April 21, 2005 to the COPPA Rule that temporarily relaxed the requirements of the Act. The Act remains in full force for web sites that do not comply with the Rule.
For the relaxed Rule to apply to you, certain preconditions must be met. These preconditions depend on your individual circumstances. Compliance with the relaxed Rule is much easier (and cheaper) than compliance with COPPA.
The extension of the Rule could benefit your business by permitting activities that you previously may have thought were illegal. For those currently collecting customer information, compliance with the Rule could avoid costly regulatory proceedings. And in both cases, the additional customer comfort that might be generated by declaring your compliance with the Rule may encourage the use of your web site – and after all, that’s what it’s all about.
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