South Carolina’s Age-Appropriate Design Code Signed Into Law and Effective Today

by: Joyce Kim

On February 5, Governor McMaster signed Southern Carolina’s Age Appropriate Design Code (HB 3431) (the “Act”) into law, effective immediately. The Act imposes a broad set of requirements for covered online services regarding minors, which are defined as consumers younger than 18. We will monitor this statute and any guidance from South Carolina, and we do anticipate there will be legal challenges.  However, given the immediacy of the effective date, we recommend that any client that could be subject to this statute reach out for further analysis.

Covered Online Services are broadly defined as entities that (1) provide an online service in South Carolina (2) are reasonably likely to be accessed by minors (which is a more limited definition than in other states we have seen and will primarily apply where there is some knowledge the user is a minor – even through inferences), (3) determines purposes and means of processing personal data; and meets one of the following thresholds:

  • Annual revenue exceeds $25 million;

  • Handles 50,000+ personal data records annually (collection, sharing, or sales); or

  • At least 50% of annual revenue from selling or sharing personal data.

Requirements

At a high level, the Act requires covered online services to do the following (among other things):

  • exercise reasonable care in the design and operation of the online service to prevent harm to minors (including, but not limited to, compulsive usage, psychological harm, emotional distress, material financial or physical injury, etc.)

  • provide easy-to-use tools to disable features that are not necessary to provide services, limit the amount of time the user spends, limit financial value of purchases, restrict interactions with other unknown users, restrict visibility of minor accounts, prevent notifications or push alerts, etc.

  • provide an option to opt out of personalized recommendation systems

  • maintain settings for the highest level of protection by default for minors for certain aspects

  • provide notice of parental monitoring under certain circumstances

  • provide parental tools (to manage the minor’s account settings, restrict the minor’s purchases; enable parents to view the total time spent on an online service, etc.)

  • establish mechanisms for report harms to minors

  • provide required disclosures under the Law in an easy-to-understand manner

  • submit a public report to the attorney general prepared by an independent third-party auditor that shall be posted on the attorney general’s website

The Law also restricts:

  • facilitating targeted advertising to minors

  • default collection of precise geolocation information unless necessary (and even then notice is required)

  • profiling minors

  • facilitating ads directed to minors for products prohibited for minors

  • using dark patterns

Enforcement

While there is no private right of action provided under the Act, violations can result in treble the financial damages incurred.  There is also a provision that allows for personal liability for officers and employees for wanton or wilful violations. The Act does expressly make dark patterns subject to the South Carolina Unfair Trade Practices Act (among, possibly, other conduct), which may provide an angle for a private right of action. The Act also expressly states that any other law that would provide greater protection to minors is not limited by this act.

 Originally published by InfoLawGroup LLP. If you would like to receive regular emails from us, in which we share updates and our take on current legal news, please subscribe to InfoLawGroup’s Insights HERE.

 

Joyce Kimsouth carolina, online services, Age-Appropriate Design Code Act