{"id":640902,"date":"2013-02-01T10:15:14","date_gmt":"2013-02-01T15:15:14","guid":{"rendered":"http:\/\/gigaom.com\/?p=606576"},"modified":"2013-02-01T10:15:14","modified_gmt":"2013-02-01T15:15:14","slug":"path-reaches-settlement-with-ftc-agrees-to-pay-800000-fine-for-coppa-violations","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/640902","title":{"rendered":"Path reaches settlement with FTC, agrees to pay $800,000 fine for COPPA violations"},"content":{"rendered":"
\"DaveMorin-DLD\"<\/a><\/p>\n

Path CEO Dave Morin. Photo by Om Malik<\/p>\n<\/div>\n

Path<\/a>, the San Francisco-based startup that offers private social networking services, has reached a settlement with the Federal Trade Commission (pending judicial approval) on alleged violations of the Children\u2019s Online Privacy Protections Act (COPPA<\/a>).\u00a0As part of the settlement, the company will pay a fine of $800,000 and has purged about 3,000 accounts from the network.\u00a0The settlement requires Path to establish a comprehensive privacy program and to obtain independent privacy assessments every other year for the next 20 years, the FTC said in a statement.<\/p>\n

The discovery of the underage members came as a byproduct of the FTC investigation into the privacy fiasco over the uploading of iPhone address books to Path’s servers without the permission of the individuals.\u00a0That privacy breach became a major headache for the company, including stoking\u00a0\u00a0the ire of a very irate Apple. The company later changed its policies<\/a>.<\/p>\n

In a statement, the\u00a0FTC said<\/a>:<\/p>\n

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“Over the years the FTC has been vigilant in responding to a long list of threats to consumer privacy, whether it\u2019s mortgage applications thrown into open trash dumpsters, kids information culled by music fan websites, or unencrypted credit card information left vulnerable to hackers,\u201d said FTC Chairman Jon Leibowitz. \u00a0\u201cThis settlement with Path shows that no matter what new technologies emerge, the agency will continue to safeguard the privacy of Americans.\u201d<\/p>\n

In addition to the $800,000 civil penalty, Path is prohibited from making any misrepresentations about the extent to which it maintains the privacy and confidentiality of consumers\u2019 personal information.\u00a0 The proposed settlement also requires Path to delete information collected from children under age 13 and bars future violations of COPPA.\u00a0 Path has already deleted the address book information that it collected during the time period its deceptive practices were in place.<\/p>\n<\/blockquote>\n

Dave Morin, Path’s founder and chief executive officer, said that the company had identified the accounts in February 2012 and by May 2012 had implemented changes to its sign-up process that automatically caught the underage sign-ups. Path discovered the issue on its own and addressed it (that is, they removed and blocked minors under the age of 13 from the service) before the FTC approached the company, Morin said. Path is currently compliant with COPPA rules.\u00a0Morin said that the typical Path user is about 25 years old. The company, which has about 6 million registered users, is\u00a0targeting families<\/a> for using Path to share personal moments, so this particular settlement offers up a new and unique set of challenges to the company.<\/p>\n

Morin said that the big reason the underage children were able to get into the network is because the company\u00a0didn’t have requisite checks and balances in the system. In a blog post that the company shared with us, Morin explained:<\/p>\n

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Today the United States Federal Trade Commission (FTC) announced that it reached a settlement pending court approval with Path regarding alleged violations of the Children\u2019s Online Privacy Protections Act (COPPA). The gist of the FTC\u2019s complaint is this: early in Path\u2019s history, children under the age of 13 were able to sign up for accounts. A very small number of affected accounts have since been closed by Path.<\/p>\n

As you may know, we ask users\u2019 their birthdays during the process of creating an account. However, there was a period of time where our system was not automatically rejecting people who indicated that they were under 13. Before the FTC reached out to us, we discovered and fixed this sign-up process qualification, and took further action by suspending any under age accounts that had mistakenly been allowed to be created.<\/p>\n

We want to share our experience and learnings in the hope that others in our industry are reminded of the importance of making sure services are in full compliance with rules like COPPA. From a developer\u2019s perspective, we understand the tendency to focus all attention on the process of building amazing new things. It wasn\u2019t until we gave our account verification system a second look that we realized there was a problem. We hope our experience can help others as a reminder to be cautious and diligent.<\/p>\n

Throughout this experience and now, we stand by our number one commitment to serve our users first.<\/p>\n<\/blockquote>\n

Path has raised a total of $41.2 million from investors such as Index Ventures, Kleiner Perkins Caufield & Byers and Redpoint Ventures. It was rumored that Google offered a couple hundred million dollars for the company.<\/p>\n

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