On November 13, 2013, the FTC announced that it had denied AssertID Inc.'s ("AssertID") application for approval of a social network-based method of obtaining verifiable parental consent under the amended Children's Online Privacy Protection Rule (the "COPPA Rule").1 The amended COPPA Rule became effective this summer as discussed in our previous posting.

Under the COPPA Rule, before a regulated website operator2 may collect a child's personal information, it must provide notice of its information collection practices and obtain verifiable parental consent to collect the information.3 The COPPA Rule requires operators to make "reasonable efforts to obtain verifiable parental consent, taking into consideration available technology," and provides that the consent method must be "reasonably calculated, in light of available technology, to ensure that the person providing consent is the child's parent."4 The COPPA Rule sets forth specific methods for obtaining verifiable parental consent that are deemed compliant with these requirements, including asking parents to send in a signed consent form, use a credit card with the transaction or call a toll-free number and, under the recent COPPA Rule amendments, allows operators to request FTC approval of alternate verifiable parental consent methods.5 To be considered for approval, applicants must provide a detailed description of their proposed alternative verifiable parental consent method and an analysis of how the method satisfies the requirements of the COPPA Rule. The FTC is then required to issue a determination within 120 days of the application's filing, following publication of the application and review of any public comments received during that time.

On August 21, 2013, the FTC requested public comment on an application submitted by AssertID, which is a private for-profit corporation that develops proprietary privacy and identity verification technologies, products and services that utilize social network analysis.6 AssertID applied for FTC approval of its "ConsentID" system ("ConsentID"), which uses "social-graph verification," a method by which a parent's social network friends are asked to verify the parent's identity and confirm that he or she is the parent of the child in question. Based on the number of favorable responses, the parent receives a "trust score" and is allowed to grant consent for the child in question if his or her "trust score" meets a certain threshold.

In its November 12, 2013 letter to AssertID, the FTC denied AssertID's application for approval, finding that AssertID's proposed consent method failed to satisfy the COPPA Rule's requirements.7 The FTC stated that articles cited by AssertID as evidence of trust among social network members failed to establish that social graph verification is effective because no studies supported that a particular "trust score" or number of verifiers is adequate to verify a person's identity. The FTC also stated that the beta testing conducted by AssertID did not demonstrate that social graph verification would be effective in the marketplace or that it is reasonably calculated to ensure that the person providing consent is the child's parent. The FTC was persuaded by public comments expressing concern about the reliability of social graph verification, including the ease with which social media users (adults and children) can fabricate profiles using false information. The FTC noted that Facebook's own 10-Q filing with the Securities and Exchange Commission indicates that approximately 8.7 percent of its users have fake accounts, for a total of 83 million fake accounts.8 The FTC ultimately determined that social graph verification is an emerging technology that requires further research and marketplace evidence demonstrating that it is a reliable means to verify that a person providing consent to the collection of a child's personal information is actually the child's parent.

AssertID's application was the first submission for approval of a proposed alternative parental consent verification system under the amended COPPA Rule. There are currently two other applications pending, one from Imperium LLC and the other from iVeriFly, Inc.9 The FTC's rejection of AssertID's application may be an early indication that the FTC will impose a high evidentiary bar on companies seeking pre-approval of proposed alternative consent mechanisms and that peer approval (or the absence of negative public comments) may be important in obtaining approval.

It should be noted, however, that companies are not required to submit all proposed verification methods for the FTC's approval prior to using them in practice. The pre-approval process is entirely voluntary and any method that meets the COPPA Rule requirements will ultimately be deemed compliant. Companies regulated under COPPA should closely follow the public comments and FTC decisions in this area in assessing whether to implement their own consent mechanism without seeking pre-approval by the FTC or if obtaining clearance from the FTC in advance is advisable, particularly with a newer consent format or technology.