On October 4, 2012, the Federal Trade Commission announced that Artist Arena LLC (“Artist Arena”), an operator of fan websites for several popular recording artists, agreed to settle charges that it violated the Children’s Online Privacy Protection Act (“COPPA”) and the FTC’s COPPA Rule (“the Rule”) by improperly collecting personal information from children under the age of 13 without first obtaining verifiable parental consent. The settlement will impose a $1 million penalty on Artist Arena, bar future violations of the Rule and require deletion of the information collected in violation of the Rule.
In its complaint, the FTC alleged that Artist Arena’s activities violated the requirements of COPPA and the Rule and constituted deceptive acts or practices in violation of Section 5 of the FTC Act. Specifically, the FTC maintained that Artist Arena operated recording artists’ websites where users, including children, could register for fan clubs, subscribe to online newsletters, create online profiles and interact with other users by sending and accepting friend requests and posting on members’ walls. The FTC claimed that Artist Arena knowingly registered children on these websites, and failed to provide direct notice to parents of its information practices and to obtain verifiable consent from parents prior to processing the children’s personal information. The FTC also asserted that Artist Arena made false and misleading statements by representing that it would not collect personal information without prior parental consent and that it would not activate a child’s registration without the parent’s express consent.
The FTC’s settlement agreement contained a consent decree in which Artist Arena agreed to (1) cease all actions in violation of the Rule, (2) delete all information collected and maintained in violation of the Rule, (3) post a clear and conspicuous notice of a website link to the FTC’s tips for protecting children’s privacy, (4) pay a civil penalty of $1 million, and (5) maintain compliance reporting, monitoring and recordkeeping requirements. In the settlement announcement, FTC Chairman Jon Leibowitz stated that “[t]he FTC is in the process of updating the COPPA Rule to ensure that it continues to protect kids growing up in the digital age.”