FTC announced on August 15 that it has reached a settlement with W3 Innovations, LLC, a small start-up mobile app developer doing business as "Broken Thumbs Apps." The defendants agreed to pay a $50,000 penalty to settle the FTC's charges that they had violated the Children's Online Privacy Protection Act (COPPA) by illegally collecting and disclosing personally identifiably information ("PII") from tens of thousands of children under age 13, without their parents' prior consent. According to the FTC's complaint, the defendants' apps, including "Emily's Girl World," "Emily's Dress Up," and "Emily's Runway High Fashion," were directed to children, listed in the Games-Kids section of the Apple "App Store," and downloaded more than 50,000 times. The case represents the FTC's first enforcement action against a mobile app developer, and it seems to send a clear message that mobile app developers should follow the same rules as more traditional websites when it comes to consumer privacy issue and privacy policies, especially when marketing to children.

The Consent Decree names not only the company itself, but also its President, Mr. Justin Maples. In addition to the monetary penalty, the Consent Decree prohibits the defendants from engaging in future violations of COPPA and requires them to delete all PII collected in violation of COPPA. Notably, however, the Consent Decree lacks a future consumer education component, which was a feature of previous FTC settlements with Disney's Playdom Inc. and others. This may be a recognition by the FTC of the realities of the mobile marketplace, where lengthy disclosures are simply not possible.

The case is U.S. v. W3 Innovations LLC, No. 11-3958 (N.D. Cal.).