The Children’s Advertising Review Unit of the Council of Better Business Bureaus (CARU) routinely monitors advertising to children.  Through those monitoring efforts, CARU brings challenges against advertisers for alleged non-compliance with its Self-Regulatory Program for Children’s Advertising and the Children’s Online Privacy Protection Act (COPPA).  In a recent case published on March 10, 2014, CARU pursued children’s mobile app maker Outfit 7.  Outfit 7 develops, markets and distributes mobile apps such as MY TALKING TOM, TALKING TOM CAT 2 and JIGTY on Apple’s App Store, Google Play and the Windows Phone Store.  The subject of CARU’s challenge against Outfit 7 was the TALKING TOM CAT 2 app.  In addition to other features, the TALKING TOM 2 app allows users to speak words into the device’s microphone and Tom, the talking cat, will repeat them back in a funny voice.  The app displays banner ads at the top of the screen that advertise other game apps, many of which are developed by Outfit 7.  The app is also occasionally completely taken over by large pop-up ads provided by third party advertising networks.  CARU claimed that none of the ads were labeled or identified as ads.  In addition, CARU took issue with the fact that the app included a “child mode” setting that a user of any age could control by merely clicking to turn it off within the app.  At the time of the challenge, the app contained no age-screening feature.  If a user turns “child mode” off, the availability of in-app purchases was enabled and the user could link to Twitter, which, as CARU points out, is a web site that does not age screen.  CARU was concerned that children may not understand that the ads are actually ads (and not game content) and that the app links to Twitter, which is a website inappropriate for children.

Outfit 7 disagreed with CARU’s concerns about the presentation of the ads and claimed that all were presented “in accordance with accepted industry standards” and “in a way that makes it clear that they are ads.”  Nonetheless, Outfit 7 agreed to label the banner ads that advertised its own apps as ads.  As to the ads served by third party advertising networks, Outfit 7 told CARU that the agreements it has in place with ad networks do not allow it to change the ads, but that its agreements do require the ad network to abide by Outfit 7’s advertising restrictions, one of which is that ads must be clearly identifiable as ads and not disguised as editorial content.   Outfit 7 also disagreed with CARU’s concerns about the link to Twitter because it only links to the Twitter profile for the Tom Cat character in the app and that for any other activity on Twitter a user must register and be 13 years old (although Twitter does not screen for age at registration).   CARU requested demographic data from Outfit 7; presumably to help determine the age range of users of the app.  Outfit 7 had no such data, but indicated it had already determined that it would conduct a survey to determine its user demographics and to make COPPA compliance decisions based on those results.

As to the issue of data collection within the app, Outfit 7 told CARU that it collects “some non-intrusive data such as usage data and data about the device” and IP address to determine the country of the user for app localization.  The “child mode” operates to help prevent against inadvertent clicking of buttons, disables in-app purchases and the sharing of information outside of the app.

Blurring

CARU determined that a child may not understand that the banner ads at the top of the screen are advertisements.  On this issue, one of CARU’s guidelines specifically reads: “If an advertiser integrates an advertisement into the content of a game or activity, then the advertiser should make clear in a manner that will be easily understood by the intended audience, that it is an advertisement.”  CARU found that the banner ads at the top of the screen could appear to a child as just another icon on the screen.   CARU went on to write “A child, particularly one who may not be able to read, might tap on the advertisement expecting it to cause Talking Tom to complete another action.”  CARU was not persuaded by Outfit 7’s claim that its ads were presented in accordance with industry standards and went even further to clarify that CARU is not bound by industry standards.  CARU did not require further action in connection with the takeover pop-up ads that were served by third party ad networks.

COPPA

Despite the unavailability of actual data to tell CARU the demographics for the app, CARU determined that the cartoon-like characters and activities available within the app allow it to infer that a significant number of children are using the app.  Because “child mode” in the app disables sharing of information outside of the app, disables the ability to sign up for a newsletter and a link to Facebook and Twitter, CARU found that the app should implement a neutral age-screening process before the “child mode” can be turned off.  In addition, CARU recommended that Outfit 7 remove the link to Twitter altogether.

Why This Matters

There are three main takeaways here:

(1) CARU discovered Outfit 7’s app through its own routine monitoring of the industry; not from a competitor or complaining user;

(2) The ad blurring discussion in this case presents a good reminder that CARU (and regulators in general) will review ads by taking into account the totality of available factors, including the ad itself, the surrounding content and features and the likely audience; and

(3) app developers are trying all sorts of ways to comply with COPPA or to figure out ways to make COPPA irrelevant for their apps.  COPPA compliance has never been easy, but the recent amendments to the COPPA Rules require significant attention to detail – particularly when planning to launch an app.  See our post HERE on the recent amendments to the COPPA Rule.  CARU’s inquiry in this case involved taking a look at where Outfit 7 advertised its app, the content and features of the app, the information collected by the app (both active and passive (in the background), any demographics known about the app, the third party’s involved in the app (e.g., network advertisers) and how users can travel from the app to third party sites and platforms.  That level of inquiry is a good start for app developers to undertake internally when beginning the process of determining what level of COPPA compliance may be necessary for an app.