HyperBeard Settles COPPA Violation with FTC

CARU said that illustrates the importance of self-regulation

App developer HyperBeard has agreed to pay $150,000 and delete personal information it collected illegally for targeted advertising.

That is part of a settlement it struck with the FTC, according to the commission.

The FTC alleged that the company had violated the Children’s Online Privacy Protection Act Rule (COPPA Rule) by knowingly “allowing third-party ad networks to collect personal information in the form of persistent identifiers to track users of the company’s child-directed apps, without notifying parents or obtaining verifiable parental consent.” Ad networks used the info to target the kids.

While targeted advertising is the economic model that undergirds free online content, COPPA does not allow such targeting without notice and parental approval.

Among the child-directed apps at issue were Axolochi, BunnyBuns, Chichens, Claberta, Clawbert, KleptoCats, KleptoCats 2, KleptoDogs, MonkeyNauts, and NomNoms.

“If your app or website is directed to kids, you’ve got to make sure parents are in the loop before you collect children’s personal information,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection in announcing the settlement.

HyperBeard’s CEO Alexander Kozachenko and managing director, Antonio Uribe, were also named in the complaint.

The settlement penalty was actually $4 million, but the FTC said it would accept the $150,000 since the company said it couldn’t pay any more. If that was not the truth, the FTC will go after the other $3,850,000.

Dona Frasier, VP of the National Programs’ Children’s Advertising Review Unit (CARU), said the settlement shows that “companies [that] choose not to follow self-regulatory principles and procedures [BBB open the door to significant consequences with a regulatory agency such as the FTC.”

“Certainly, when companies find themselves caught in the crosshairs of an investigation by one of BBB National Programs’ self-regulation programs, as HyperBeard did in March 2019, it is not our desire to be punitive in nature, but instead to help them align their practices with established standards for the benefit of their stakeholders,” she said.