The Pitfalls of Marketing to Minors Even When You Don’t Mean To

The law has always sought to protect minors when it comes to commercial transactions.  The conventional rule is that someone under 18 cannot bind themselves to a contract.  It should, therefore, be no surprise there are special laws about marketing to children on the Internet—even when you don’t mean to.

OMG! I contracted with a minor.

A perfect warning for those trying to contract with minors comes from the fight over rights to the @OMGFacts brand.  Seventeen-year-old Adorian Deck tweeted about celebrity gossip and weird news.  Emerson Spatz allegedly paid Deck $100 and promised Deck a share of profits from merchandising and a YouTube Channel.  Deck also assigned all current and future copyrights to Spatz.  Spatz marketed the Twitter feed as part of his media company that targets youngsters. 

The teen now claims the deal was unconscionable and unenforceable because, in part, of his age although Deck’s mother also signed off on the contract.  Since signing the contract, the @OMG Facts brand has gone from 400,000 followers to roughly 1,900,000 million.   When knowingly contracting with a minor, take heed.

Virtual compliance with COPPA is not enough

You also need to be careful when simply marketing to children.  The most direct statute is the Children Online Privacy Protection Act.  It applies certain rules to the online collection of personal information from children under 13, including specific disclosures needed in privacy policies, methods to obtain verifiable parental consent and the rules regarding the protection of children online.  The act is one of the reasons Facebook prohibits children under 13 from having profiles. 

COPPA also applies to general websites that have actual knowledge of the collection of personal information from children.  The Federal Trade Commission has set forth numerous guidelines to help you determine whether a website is directed to children or whether you should have actual knowledge of a youngster’s use.  They are available at http://www.ftc.gov/privacy/coppafaqs.shtm.

Playdom, Inc.’s woes provide a textbook example of what not to do.  In May, it received the biggest settlement fine under COPPA to date, $3 million, from the FTC.  Playdom operates over 20 virtual online worlds.  The FTC claimed Playdom collected and disclosed personal information from hundreds of thousands of children under 13 without their parents’ consent.

Most of Playdom’s games were targeted for general audiences, but they did attract children.  One of the worlds, named Pony Stars, specifically targeted children.  The sites’ privacy policies claimed Playdom would prevent children from posting personal information on their sites.  After the FTC began investigating, Playdom terminated most of the virtual worlds although some of them lived on through non-U.S. operators before they were shut down as well. 

Notwithstanding the privacy policy, the sites allowed children to post their names, email addresses, instant messenger screen names, and locations on online profile pages and forums.   Playdom asked for ages and email addresses from users.  For those under 13, Playdom also asked for an email address.  The parents would receive a “welcome” email, but the under-aged users could access the entire site and leave whatever personal information they wanted on their profiles without the parent’s reviewing or agreeing to it.  As a result, children were really treated no differently than adults. 

The good news is the FTC laid out some guidelines that would show good COPPA compliance procedures.   If you believe you are collecting personal information from those under 13 (whether they admit it or not) you should:

•Tell parents exactly what inform you collect from children and how the information is used or disclosed.
•Obtain verifiable consent from parents prior to any data collection.
•Invoke a mechanism that allows parents to review the specific personal information collected and provides parents an opportunity to refuse the further use of the data.
•Only collect what is reasonably necessary to provide the service to the child.
•Take reasonable steps to protect the confidentiality, security, and integrity of the children’s personal information.
•Include a link to the FTC’s website to provide tips on protecting children’s privacy online: www.OnGuardOnline.gov.

But wait, there’s more

Complying with COPPA may be enough.  For example, Facebook forbids thirteen-year-olds from creating profiles and those under 18 to have their parents’ permission.  The reality shows a different picture.  A Consumer Reports “State of the Net” survey revealed over 7.5 million Facebook users were under 13 and more than five million were under 11. 

The numbers are not Facebook’s only problems.  Remember, minors cannot contractually provide consent to various agreements such as the consent to allow Facebook to share a user’s “likes.”  In May, a class action lawsuit was filed against Facebook in New York claiming the social network violated New York advertising law by allowing minors to “like” products without their parents’ consent.  New York has a law that prohibits the using an individual’s likeness for advertising without permission.  As explained above, the law says minors cannot give contractual permission. 

The suit seeks the revenue Facebook received from the allegedly unauthorized use of the names of images of minors who liked advertisements and products. 

The Bottom Line

If you have even just a suspicion that you collect data on children or in any way require the consent of a minor to do any type of business or marketing on your site, you need to be careful.  No policies or requirements can guarantee you will not get sued, as evidenced by Facebook’s troubles, but taking some basic precautions can keep the harm to a minimum.