Last week, the Federal Trade Commission (“FTC”) reached a settlement with Artist Arena LLC (“Artist Arena”), a company that operates pop star fan websites targeting the Tween set. In the  complaint against Artist Arena, the FTC alleged that Artist Arena  violated the Children’s Online Privacy Protection Act Rule (“COPPA Rule”) by failing to provide notice to parents of its information practices and by failing to obtain verifiable parental consent prior to collecting, using, and disclosing personal information from children online. Artist Arena operates websites such as www.BieberFever.com, www.RihannaNow.com, www.DemiLovatoFanClub.net, and www.SelenaGomez.com (collectively, the “Sites”) and offered fan club and/or newsletter subscriber services through the Sites.  Further, registered fan club members on the Sites could create online profiles and interact online with other club members (e.g. sending personal messages and posting on walls and comment boards).  During the registration process for these services, Artist Arena collected children’s names, addresses, email addresses, birth dates, gender and other information. If a registrant indicated that he/she was under the age of 13 during the registration process, the Sites asked the child to enter a parent’s email address.  In some cases, the email to the parent allowed the completion of the registration process, but failed to comply with the COPPA Rule in other ways. In other cases, children could complete registration and begin creating their online profiles without any verification from the parent whatsoever.

In particular, the complaint alleged that Artist Arena violated the COPPA Rule when registering children for the newsletters and fan clubs on the Sites by:

• Knowingly registering over 25,000 users for newsletters and fan clubs who were under 13;
• Maintaining personal information from almost 75,000 more children who began, but did not complete the registration process ;
• Failing to provide direct notice to parents of what information the Sites collected from children, how the Sites used such information, and Artist Arena’s disclosure practices for such information; and
• Failing to obtain parental consent prior to collecting, using or disclosing children’s personal information.

The settlement will:

• Impose a $1 million civil penalty on Artist Arena;
• Bar future violations of the COPPA Rule;
• Require Artist Arena to delete information collected in violation of the COPPA Rule; and
• Post the following notice on its websites wherever personal information is collected for a period of five years: “NOTICE: Visit www.OnGuardOnline.gov for tips from the Federal Trade Commission on protecting kids' privacy online.”