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Gaming's next legal hotbed
Gaming's next legal hotbed Exclusive
February 23, 2012 | By Chris Morris




It's an election year. And despite 2011's historic Supreme Court ruling, you really didn't think video games were going to be dropped from the political agenda, did you?

As predicted, privacy is fast becoming a legal hotbed and while it's something that's certain to impact traditional game makers in one form or another, it's mobile developers who are increasingly finding themselves in the crosshairs.

A new study from the Federal Trade Commission looking at mobile apps for kids found dozens of applications failed to disclose how they use a child's personal data. And that could put them in violation of privacy laws.

"Young children and teens are increasingly embracing smart phone technology for entertainment and educational purposes," said the report. "Parents generally cannot determine, before downloading an app, whether the app poses risks related to the collection, use, and sharing of their children's personal information."

"Although the two major U.S. mobile app stores provide some information and controls governing apps, all members of the mobile app ecosystem the app stores, the developers, and the third parties providing services within the apps must do more to ensure that parents have access to clear, concise and timely information about the apps they download for their children."

The investigation came from increased focus on the Children's Online Privacy Protection Act (COPPA), which the FTC pushed to update last fall.

While this study focused solely on what disclosures were given to parents, the FTC plans to conduct additional checks over the next six months, which could result in COPPA violation accusations.

And those violations can be expensive. Last May, Disney-owned Playdom paid $3 million to settle charges it had illegally collected and disclosed personal information from hundreds of thousands of children under age 13 without their parents' prior consent. In August, developer Broken Thumbs Apps settled a similar case with the FTC over the child-targeted app Emily's Dress Up and Shop for a reported $50,000.

The FTC cited those settlements and the proposed rule changes in its report, noting they were "a warning call to industry that it must do more to provide parents with easily accessible, basic information about the mobile apps that their children use." It also said it plans to "evaluate whether the industry is moving forward to address the disclosure issues raised in this report" about as clear a signal as it can give that game makers are once more under the microscope.

While the report largely pointed its finger at app makers, it didn't have a lot of kind words for either the Apple or Android app stores either.

"The app stores do not appear to enforce these requirements," it said. "This lack of enforcement provides little incentive to app developers to provide such disclosures and leaves parents without the information they need."

Apple, for its part, seems to be taking the report seriously. On Wednesday, the company signed an agreement (alongside Google, HP, and others) with the state of California to increase app privacy.

Protecting the privacy of children is an issue that few companies are likely willing to argue. There's no upside in it financial or political. The good news for game makers is this is an issue that's unlikely to affect the content of games.

"It's less about the content in the online environment as it is in fair warning and fees," says Michael Zolandz, partner at SNR Denton. "I think that's the big issue in the commission's context. It's not so much what children are able to access. It's hidden fees or circumstances where it's a free download that then smacks you with hundreds of dollars in add-ons."

The problem is: Privacy policies are often something a company writes and forgets. As the mobile industry evolves, developers that make games and educational apps in that space are going to have to keep those policies on their radar, ensuring that their products both comply with their own rules as well as the government's because any slip-ups could be costly ones.


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