Trust for TRUSTe’s COPPA Changes? FTC Seeks Comment
Changes may be coming to TRUSTe’s safe harbor program under the Children’s Online Privacy Protection (COPPA) Rule, and the Federal Trade Commission is seeking public comment.
Among other things, the FTC’s COPPA Rule requires that operators of commercial websites and online services directed to children under the age of 13 (or general audience websites and online services that knowingly collect personal information from children under 13) must post comprehensive privacy policies on their sites, notify parents about their information practices, and obtain parental consent before collecting, using or disclosing any personal information from children under the age of 13.
The COPPA Rule also contains a “safe harbor” provision that permits industry groups or others to submit self-regulatory guidelines that would implement the rule’s protections. If the guidelines comply with the FTC-approved guidelines, the agency will grant safe harbor status. TRUSTe received approval May 2001 to operate a self-regulatory program, which was amended in 2013 after the agency revised the COPPA Rule.
Now TRUSTe has again proposed to modify its program requirements. The alterations were triggered by an agreement with New York Attorney General Eric Schneiderman. While the requirements fundamental to COPPA remain the same, the company seeks to make substantive changes related to third-party tracking technologies and the timing for seal removal for participants who have not completed annual review and remediation by the anniversary of the prior year’s certification date.
The FTC requested comment on TRUSTe’s proposed requirement that participants conduct an annual internal assessment of third parties’ collection of personal information from children on their websites or online services. In addition, the agency asked for input on whether the mechanisms used to assess compliance with the proposed modified program requirements are effective and any benefits, costs and alternatives that should be considered.
Comments will be accepted until May 24.
To read the Federal Register notice requesting public comment, click here.
Why it matters: The changes to TRUSTe’s program were prompted by an ongoing investigation by AG Schneiderman dubbed “Operation Child Tracker” that resulted in TRUSTe paying $100,000 and promising to more effectively evaluate whether sites operated by its customers are in compliance with COPPA.
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Ninth Circuit Moves Misleading Pricing Suit Forward
A misleading pricing suit against Neiman Marcus was given new life by the U.S. Court of Appeals for the Ninth Circuit when the panel reversed the dismissal of the complaint.
According to plaintiff Linda Rubenstein, the national retail chain duped consumers by using price tags listing a price “Compared To” a fake higher price—a move to make individuals think they were getting a bargain at the company’s Last Call outlet stores. A district court dismissed her claims based on California’s False Advertising Law (FAL), its Consumer Legal Remedies Act (CLRA) and Unfair Competition Law (UCL), as well as the Federal Trade Commission’s Guides Against Deceptive Pricing.
Rubenstein appealed, and the federal appellate panel reversed and remanded in an unpublished memorandum.
Whether a business practice is deceptive is usually a question of fact that is not an appropriate basis for a motion to dismiss, the Ninth Circuit emphasized. As the court noted, where, “as here, the reasonable consumer test applies to a plaintiff’s underlying claims, it is a ‘rare situation in which granting a motion to dismiss is appropriate.’”
The plaintiff’s complaint alleged sufficient facts to raise a reasonable expectation that discovery would reveal evidence to support her FAL, CLRA and UCL claims, the court said. “First, Rubenstein alleges a plausible FAL claim on the basis that Neiman Marcus made statements ‘concerning any circumstance or matter of fact connected with’ the sale of its Last Call products that were ‘untrue or misleading’ or ‘which by the exercise of reasonable care should [have been known] to be untrue or misleading,’” the panel wrote.
She also stated a plausible CLRA claim by alleging that the defendant “made ‘false or misleading statements of fact concerning reasons for, existence of, or amounts of, price reductions,’” the court said. “And, although the FTC Guides do not provide a private civil right of action, ‘[v]irtually any state, federal or local law can serve as the predicate for an action under [the UCL].’” Therefore, Rubenstein’s allegations that neither Neiman Marcus nor other merchants in the vicinity sold comparable products at the “Compared To” prices at the time of her purchase were sufficient to state a claim under the UCL.
In summary, the Ninth Circuit found that Rubenstein satisfied the particular requirement by pleading the “who, what, when, where and how” of Neiman Marcus’s alleged misconduct. “Rubenstein alleges that she purchased products with Compared To price tags in a Last Call store in Camarillo, [CA] (the ‘Where’), on July 21, 2014 (the ‘When’),” the panel said. “She further alleges that Neiman Marcus (the ‘Who’), through its use of those Compared To price tags (the ‘What’), misled consumers into believing that the Compared To prices were charged by either Neiman Marcus or other merchants in the vicinity for comparable products (the ‘How’).”
Without an opportunity to conduct any discovery, “Rubenstein cannot reasonably be expected to have detailed personal knowledge of Neiman Marcus’s internal pricing policies or procedures for its Last Call stores,” and she could not be expected to plead facts to which she did not have access, the court concluded.
To read the memorandum in Rubenstein v. The Neiman Marcus Group, click here.
Why it matters: The panel’s memorandum opinion emphasized that a motion to dismiss will rarely be granted where the reasonable consumer test applies to a plaintiff’s underlying claims and the issue of whether a business practice is deceptive is a question of fact.
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TCPA Class Actions Continue to Proliferate
Just when it seemed that Telephone Consumer Protection Act (TCPA) suits might be on the wane, plaintiffs filed new putative class actions this week, targeting everything from robocalls to text messages.
California federal courts saw a pair of new suits filed by the same plaintiff against Marriott International and Gallup Inc. Both suits claimed that the hotel chain and the polling company made unsolicited calls to Jason Hartley’s cell phone number despite the fact that it was registered on the National Do Not Call Registry since December 2004.
Marriott repeatedly called the number with marketing for vacations or rewards, in one case with a prerecorded message congratulating Hartley on being drawn as a winner in a contest. The plaintiff also asserted that although he answered one of the calls and selected the option to be placed on an internal do not call list, he received yet another phone call.
As for Gallup, Hartley was “frustrated and distressed” that the company “harassed” him with a call using an automatic telephone dialing system (ATDS), he claimed. Both suits seek to represent a nationwide class of plaintiffs estimated to number “in the several thousands,” requesting statutory damages for negligent as well as knowing and/or willful violations of the TCPA.
To read the complaint in Hartley v. Marriott International, Inc., click here.
To read the complaint in Hartley v. Gallup, Inc., click here.
Why it matters: Each of the complaints stressed to the court the history and purpose of the TCPA, with references to robocalls as the “scourge of modern civilization,” as well as a discussion of the statute’s purpose, “designed to prevent calls and messages like the ones described within this complaint, and to protect the privacy of citizens like Plaintiff,” as Hartley wrote in both of his actions.
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