The new Children’s Online Privacy Protection Act Rule has been in effect less than one month, but the costs of compliance are already piling up, according to attendees at a panel discussion in Washington, D.C. Or, as Professor Eric Goldman said, “Do everything you can to avoid being covered by the statute.”
The Rule changes that became effective on July 1 broadened the definition of terms such as “personal information” and “operator,” and updated the requirements for notice, parental consent, confidentiality, security, and data retention and deletion.
Just weeks later, Web site and app developers and members of the ad industry gathered at a panel sponsored by TechFreedom to discuss the impact of the new Rule. Some noted that sites have simply opted out by excluding children under 13 rather than trying to achieve compliance, a move suggested by Goldman, director of the High Tech Law Institute at Santa Clara University School of Law. “Most general purpose sites will continue to look for avoidance strategies,” he predicted.
Others expressed concern about a potential chilling effect because companies are fearful of running afoul of the new Rule. The new Rule “will force major changes in the Internet ecosystem or it will dry up the offerings of many companies,” Stu Ingis, counsel for the Digital Advertising Alliance, told attendees.
According to an estimate by the Federal Trade Commission provided by TechFreedom, the cost of compliance will run existing operators more than $6,200 a year. But new companies could be facing up to $18,670 a year – a hefty price tag for a start-up or small business, speakers noted. Berin Szoka, president of TechFreedom, said that the estimates don’t include additional costs and the possible decrease of advertising revenue.
“There’s no evidence that we’ve had growth in COPPA-compliant sites for kids. Now we’ve made things a lot trickier. It’s the minefield of compliance,” said Steve DelBianco, executive director for NetChoice. “COPPA will raise costs, lower ad revenue, and we’ll see less content for kids in the future.”
But Maneesha Mithal, the FTC’s associate director of consumer protection, said the same arguments were made when COPPA first took effect – and children still had plenty to do on the Internet. “All these arguments were made before,” she said. She added that the agency plans to release additional updates addressing compliance. “We’re not going to bring ‘gotcha’ cases.”
Why it matters: While the agency attempted to calm industry members, compliance concerns remain high. It may be too soon to judge the true impact on small businesses, but apprehension about compliance and enforcement persists.