Internet companies say new rules on children are a burden

Jul 10, 2013 by Marina Villeneuve

Internet groups complained Monday that new Federal Trade Commission regulations to protect children's privacy online are financially burdensome to startup companies.

Under regulations that went into effect July 1, websites catering to children will no longer be able to collect a range of identifying information without obtaining verifiable parental consent.

The child protection regulations will now hold the owners of sites and apps frequented by children responsible for third-party services - such as plug-ins or ads - that collect from visitors who say they're younger than 13. The third-party services will be held liable only if the FTC can prove they knowingly collected personal information from children.

Websites that want to use such ads to provide free content for children, or that want to collect personal information for interactive content, now have to either get parental consent or forgo the content altogether, as some tech experts worry they will do.

"The biggest challenge here is that the commission defines personal information in a way that is so incredibly broad," said Lydia Parnes, the former director of the FTC's Bureau of Consumer Protection and now a privacy lawyer, at a gathering of data experts and representatives of Internet companies in Washington.

The FTC estimates annual compliance costs for current Web services at $6,223 and new services at $18,670. Eighty-five to 90 percent of the Web services are run by . TechFreedom President Berin Szoka said those costs do not take into account the potential shift in online advertisers, or the effect of regulations on startups.

"The reality is, most of the sites and services, like Facebook or Twitter, don't have an option available for kids," said Szoka, whose organization sponsored the discussion. "What is it about the (children's) that makes apps and sites from the largest to the smallest decide it's not worth doing?"

FTC attorney Kandi Parsons and Associate Director Maneesha Mithal said the new regulations are meant to update the Children's Online Privacy Protection Act of 1998. "Parents should be in the driver's seat," said Mithal, who works with Parsons in the FTC's division of privacy and identity protection. "I should know what information is being collected on children, what it's being used for and how it's being collected."

Regulators and advocates discussed how regulations would affect online advertising and kid-friendly websites during a panel discussion hosted by nonpartisan technology research group TechFreedom.

As concern over deceptive online advertising targeted at kids grew in the 1990s, Congress passed the protection act to enhance parental involvement and protect the privacy and security of personally identifiable information of children collected online.

The new regulations could affect a website such as PinewoodDerby.org, run by a Boy Scout troop, suggested Steve DelBianco, executive director of Internet advocacy organization NetChoice.

When new regulations took effect July 1, the Boy Scouts hired a lawyer to add a log-in and sign-up section to the site. Visitors are then prompted to provide a guardian's personal contact information, including birth date, phone number and Boy Scout council affiliate.

Explore further: Startups offer banking for smartphone users

5 /5 (1 vote)
add to favorites email to friend print save as pdf

Related Stories

US online child privacy get stricter

Jul 01, 2013

Toughened US regulations on online privacy for children take effect Monday, offering new protections amid the growing use of mobile apps and social networks by youngsters.

US toughens online privacy rules for children

Dec 19, 2012

US regulators unveiled new rules Wednesday aimed at strengthening online privacy protection for children, to reflect the growing use of mobile apps and social networks.

Recommended for you

Startups offer banking for smartphone users

Aug 30, 2014

The latest banks are small enough to fit in the palm of your hand. Startups, such as Moven and Simple, offer banking that's designed specifically for smartphones, enabling users to track their spending on the go. Some things ...

'SwaziLeaks' looks to shake up jet-setting monarchy

Aug 29, 2014

As WikiLeaks founder Julian Assange prepares to end a two-year forced stay at Ecuador's London embassy, he may take comfort in knowing he inspired resistance to secrecy in places as far away as Swaziland.

Ecuador heralds digital currency plans (Update)

Aug 29, 2014

Ecuador is planning to create what it calls the world's first digital currency issued by a central bank, which some analysts believe could be a first step toward abandoning the country's existing currency, ...

WEF unveils 'crowdsourcing' push on how to run the Web

Aug 28, 2014

The World Economic Forum unveiled a project on Thursday aimed at connecting governments, businesses, academia, technicians and civil society worldwide to brainstorm the best ways to govern the Internet.

User comments : 0