Analysis: FTC doles out child privacy fines to app maker

Posted by Mike Luttrell

A popular developer for Apple's iOS platform being smacked with a $50,000 fine over child privacy is just one example of the challenges facing independent developers.

Broken Thumbs Apps, via its parent company W3 Innovations, is at the wrong end of the Federal Trade Commission's investigation into concerns over its iPhone and iPod Touch games, some of which are designed primarily for children.

Among the company's titles available on the App Store are Truth or Dare, Emily's Dress Up, and Zombie Duck Hunt.

It is Emily's Dress Up that caught most of the attention from the FTC. The app asks users to submit their e-mail addresses and collects even more information for those who create a full account within the app.

The only problem with this is the Children's Online Privacy Protection Act (COPPA), which states that no online company is allowed to collect any personal information - including e-mail addresses - from users under the age of 13.

It's one of the most strictly-adhered-to laws in the cyber world. It's because of COPPA that when you sign up for an account at an online forum or e-trailer or anything else, you must first click a button that says you're over 13.

Broken Thumbs Apps did not have that measure in place for its games.

In a lawsuit filed by the FTC on Monday, the government body claimed that in addition to "the collection and maintenance of over 30,000 emails, containg email addresses, Defendants have collected, maintained, and/or disclosed personal information from over 300 Emily’s Girl World app users and approximately 290 Emily’s Dress Up app users who have registered to submit comments."

Instead of going to court, the company simply paid a settlement of $50,000 and the lawsuit was dropped.

A $50,000 settlement is a much bigger deal for a small, independent developer than it is for a huge corporation like Sony or Microsoft, both of which have faced COPPA actions as well. This episode underscores the dangers that exist for little companies trying to strike it rich in the app game - there's a big legal environment surrounding the digital space and unless you hire on a legal team, it can be quite intimidating.