FTC Imposes $1 Million Fine Against Musicians' Fan Websites for COPPA Violations
By Lindsey Tonsager and Mike Nonaka
On October 2, 2012, the Federal Trade Commission filed a proposed consent decree resolving claims that Artist Arena LLC violated the Children’s Online Privacy Protection Act (COPPA) by collecting and disclosing email addresses, birth dates and other personal information from more than 100,000 children younger than the age of 13 without obtaining proper parental consent. Artist Arena will pay a civil penalty in the amount of $1,000,000 and comply with monitoring, reporting, and recordkeeping requirements administered by the FTC.
Artist Arena operated websites that served as fan clubs for young musicians, including Justin Bieber, Rihanna, Selena Gomez, and Demi Lovato. Users could create profiles, communicate with friends, and sign up for musicians’ newsletters through the websites. The FTC alleged that the websites gathered a host of personal information from children and granted them immediate access to the websites without first providing notice to parents and obtaining parental consent as required by COPPA. Artist Arena also violated section 5 of the Federal Trade Commission Act by informing parents that the websites would not collect children’s’ personal information until after the adults had given their consent, even though the websites had already procured this information according to FTC officials.
The FTC’s settlement comes at a time when the agency is deliberating over potential updates to its rule implementing COPPA, as reported in this blog (here, here, here, and here). According to FTC Commissioner Edith Ramirez, the proposed rules would align requirements under COPPA with enforcement actions such as the one against Artist Arena. Commissioner Ramirez also stated that the agency would remain vigilant in enforcing COPPA against all companies and not just companies in emerging technologies intended to be captured by the proposed rules. “Although we are in the midst of updating COPPA to address groundbreaking new technology, we also need to ensure that well-established companies like [Artist Arena] employ familiar online tools in complying with COPPA requirements. Plainly, more needs to be done to ensure that marketing departments are mindful of COPPA requirements.”