Antitrust Law Daily FTC reaches historic settlement in children’s privacy case
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Wednesday, February 27, 2019

FTC reaches historic settlement in children’s privacy case

By Jody Coultas, J.D.

Lip syncing app Musical.ly to pay the largest civil penalty in a children’s privacy case.

The FTC has reached a $5.7 million settlement agreement with video social networking app Musical.ly, now known as TikTok, resolving allegations that the company illegally collected personal information from children in violation of the Children’s Online Privacy Protection Act (COPPA). Today’s settlement is the largest ever obtained by the FTC in a children’s privacy case, the FTC announced (U.S. v. Musical.ly, FTC File No. 172 3004, Civil Action No. 2:19-cv-1439).

The Musical.ly app allowed users to create short videos lip-syncing to music and share those videos with other users, as well as interact with other users by commenting on their videos and sending direct messages. Users were required to register for the app and provide an email address, phone number, username, first and last name, a short biography, and a profile picture. Accounts were set to public by default allowing other users to see the personal information of that user. Under the private setting, users’ profile pictures and bios remained public, and users could still send a private account a direct message. More than 200 million users have downloaded the Musical.ly app worldwide, while 65 million accounts have been registered in the United States since 2014.

The complaint, filed by the Department of Justice on behalf of the FTC in the federal district court in Los Angeles, alleged that Musical.ly violated COPPA by failing to notify parents about the app’s collection and use of personal information from users under 13, failing to obtain parental consent, and failing to delete personal information at the request of parents. COPPA requires that websites and online services directed to children obtain parental consent before collecting personal information from children under the age of 13. Musical.ly was allegedly aware that a significant number of its users were under 13 years old. Not only did Musical.ly receive thousands of complaints from parents that their young children had created accounts, there were also public reports of adults trying to contact children via the Musical.ly app. Until October 2016, the app included a feature that allowed users to view other users within a 50-mile radius of their location. Since July 2017, the company has asked about age and prevents people who say they’re under 13 from creating accounts. But Musical.ly did not go back and request age information for people who already had accounts.

In addition to the record-setting $5.7 million monetary payment, the settlement also requires the app’s operators to comply with COPPA going forward and to take offline all videos made by children under the age of 13.

Separate statement. In a separate statement, Commissioners Rohit Chopra and Rebecca Kelly Slaughter argued that the FTC should prioritize uncovering the role of corporate officers and directors and hold accountable everyone who broke the law. Rather than focusing on individual accountability only in certain circumstances, the FTC should look to hold executives of big companies who call the shots as companies accountable for breaking the law.

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