COPPA Rule Violations Alleged Against HyperBeard, Inc.

COPPA Rule Violations Alleged Against HyperBeard, Inc.

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In Settling FTC Allegations, HyperBeard, A Developer Of Apps Popular With Children, Agrees To Pay Fine And Delete Personal Information Allegedly Collected From Children Under 13 

Kehoe Law Firm, P.C. is making consumers aware that on June 4, 2020, the FTC announced that a developer of apps that are popular with children has agreed to pay $150,000 and to delete personal information it illegally collected from children under 13 to settle Federal Trade Commission allegations.

In a complaint filed by the Department of Justice on behalf of the FTC, the FTC alleges that HyperBeard, Inc. violated the Children’s Online Privacy Protection Act Rule (“COPPA Rule”) by allowing third-party ad networks to collect personal information in the form of persistent identifiers to track users of the company’s child-directed apps, without notifying parents or obtaining verifiable parental consent. The ad networks used the identifiers to target ads to children using HyperBeard’s apps.  The FTC complaint also names HyperBeard’s CEO, Alexander Kozachenko, and Managing Director, Antonio Uribe.

The COPPA Rule requires that child-directed websites, apps, and online services provide notice of their information practices and obtain parental consent prior to collecting personal information from children under 13, including the use of persistent identifiers for targeted advertising.

Many of the apps that HyperBeard offers are directed to children, including Axolochi, BunnyBuns, Chichens, Claberta, Clawbert, KleptoCats, KleptoCats 2, KleptoDogs, MonkeyNauts, and NomNoms, according to the FTC complaint. According to the FTC, the apps contain brightly colored, animated characters such as cats, dogs, bunnies, chicks, monkeys, and other cartoon characters, and are described in child-friendly terms like “super cute” and “silly.” For example, users of the KleptoCats apps send a cartoon cat out on a mission and the cat returns with surprises that users collect in a virtual room. The apps also allow users to pet, groom, feed, and dress their virtual cats.

Allegedly, according to the FTC, HyperBeard was aware that children were using its kids’ apps and promoted those same apps to children. From early 2017 through 2019, it promoted its apps on the kids’ entertainment website YayOMG. It also published children’s books and licensed other products, including stuffed animals and block construction sets, based on its apps’ characters.

As part of the proposed settlement, HyperBeard, Kozachenko, and Uribe are required to notify and obtain verifiable consent from parents for any child-directed app or website they offer that collects personal information from children under 13. They are also, according to the FTC, prohibited from using or benefitting from personal data they collected from children under 13 in violation of COPPA, and must destroy that data. The settlement includes a $4 million penalty, which will be suspended upon payment of $150,000 by HyperBeard due to its inability to pay the full amount. The full amount will be due if either the company or Kozachenko are found to have misrepresented their finances.

Source: Federal Trade Commission – FTC.gov

Kehoe Law Firm, P.C.