LAI Systems, LLC (LAI) and Retro Dreamer agreed to pay civil penalties of a combined $360,000 to settle charges issued by the Federal Trade Commission (FTC) that they violated the Children’s Online Privacy Protection Act (COPPA) by allowing advertising companies to use persistent identifiers, collected through their mobile apps, to elicit specific advertisements to children. The Director of the FTC’s Bureau of Consumer Protection, Jessica Rich, said, “It’s vital that companies understand the rules of the road when it comes to handling children’s personal information online[, and] these cases make it clear that we’re closely watching this space to ensure children’s privacy online is being protected.”
This is the first time that the FTC has brought an action against a mobile app developer for the collection and misuse of persistent identifiers. However, persistent identifiers were one of the data categories added to COPPA back in 2013.
LAI makes several children’s apps, including My Cake Shop, My Pizza Shop, Hair Salon Makeover, Friday Night Makeover, Marley the Talking Dog, and Animal Sounds; Retro Dreamer makes Ice Cream Jump, Happy Pudding Jump, Ice Cream Drop, Sneezie, Wash the Dishes, Cat Basket, and Tappy Pop. The FTC alleged that both developers allowed third-party advertising companies to collect children’s personal information through these apps and failed to inform the advertising companies that the apps were directed at children under 13. The developers also did not provide notice or obtain consent from parents before collecting the children’s information. LAI will pay $60,000 and Retro Dreamer will pay $300,000.