April 30, 2003, 12:00 AM

FTC’s big-bucks children’s privacy settlements send a message to all online marketers

(Page 2 of 2)

To take advantage of this exception, a sweepstakes sponsor must essentially follow three steps.

1. The Entry Form

The FTC has cautioned that the exception to prior parental consent applies only to collection of online contact information. Absent verifiable parental consent, a sponsor may only collect a child’s e-mail address on the entry form.

2. Opt-Out Notice

If an entrant is under 13, a sponsor may use the entrant’s e-mail address only if the sponsor sends parents an opt-out notice. This notice must inform parents that the sponsor has collected their child’s e-mail address as part of a sweepstakes and that the child may be contacted later should he be selected as a winner. The notice should also state that the parent can request that a child’s e-mail address be deleted from the sponsor’s records and that the child no longer be contacted.

A sponsor must ensure that there is an easy way for parents to contact the sponsor, such as an e-mail address or a toll-free number. And the parents must be told that if they fail to respond to the notice, the sponsor may use the child’s e-mail address to contact the child in the event the child wins. The sponsor may retain the child’s e-mail address until the parent contacts the sponsor and opts out. If a parent opts out, the sponsor must delete and make no further use of the child’s e-mail address.

3. Scope of Use

A sponsor may collect a child’s e-mail address under the third exception only as long as “such information is not used for any other purpose” than to contact the child if the child wins.

For companies willing to limit contacts with children online, there is an even easier way to conduct a basic sweepstakes. Under another exception, COPPA allows sponsors to collect an e-mail address if it is “used only to respond directly on a one-time basis to a specific request from the child and is not used to re-contact the child and is not maintained in retrievable form.” The FTC has informally opined that, under this exception, a company could collect an e-mail address on the entry form, then contact only the winner via e-mail. No other online contact with the winner would be permitted and the sponsor would have to delete all e-mail addresses at the end of the sweepstakes. Under this exception, a sponsor would potentially avoid having to send the COPPA notice to the parents.

Planning for success

An online sweepstakes directed to children involves many moving parts and the efforts of many people. For a promotion to be successful, sponsors need to ensure that the sweepstakes is structured lawfully, that privacy policies contain the information required by COPPA, that advertisements present the information required by law in a child-friendly format, that the appropriate notices are sent to parents, and that web sites are capable of screening children and processing entries. Sponsors must also ensure that each of these parts works together as a whole. Failure to pay attention to any of these details could lead to a challenge from the FTC or CARU and turn a successful promotion into a liability.

John P. Feldman and Gonzalo E. Mon are marketing, advertising, and trademark law attorneys at Collier Shannon Scott PLLC. They can be reached at JFeldman@colliershannon.com and GMon@colliershannon.com.

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