Popcorn Company Settles FTC Privacy Violation Charges

American Pop Corn Company (APC) will pay $10,000 to settle Federal Trade Commission charges that it violated the Children's Online Privacy Protection Rule (COPPA Rule) by collecting personal information from children on its "Jolly Time" Web site without obtaining parental consent. The settlement also will bar future violations of the COPPA Rule.

"This is the fifth law enforcement action the FTC has taken to enforce the COPPA Rule since it became effective in April, 2000" said J. Howard Beales III, Director of the FTC's Bureau of Consumer Protection. "The civil penalty of $10,000 reflects the relatively small number of violations in this case. But we hope it sends a strong message to operators of Web sites directed to children: We intend to enforce COPPA rigorously."

The COPPA Rule applies to operators of commercial Web sites and online services directed to children under the age of 13, and to general audience Web sites and online services that knowingly collect personal information from children. Among other things, the Rule requires that Web sites get verifiable consent from a parent or guardian before they collect personal information from children. It also prohibits sites from conditioning a child's participation in an activity on the child's disclosing more personal information than is reasonably necessary to participate in such activity.

In its complaint, the FTC alleges that APC maintains a Web site, www.jollytime.com, with a "Kids Club" section that features games, crafts, contests, and jokes directed to children under the age of 13. Without obtaining parental consent, the company collected personal information, including names, e-mail addresses, and home addresses, from children who went to the "Kids Club" section.

It also conditioned participation in certain prize offers on children's providing more information than was necessary to participate in the activity, the FTC alleges. Both practices violate the COPPA Rule. In addition, APC posted a privacy policy statement on its Web site stating that it would notify parents or guardians by e-mail whenever "guests" under the age of 18 registered at its site. It stated that parents or guardians would be given the option to invalidate the registration. But APC did not contact the parents of children who registered and provided personal information, and therefore the privacy policy statements were false, in violation of the FTC Act, the agency alleges.

The settlement bars APC from future violations of the COPPA Rule and from misrepresenting its policies about collecting, disclosing, or using children's personal information. It also calls for a civil penalty of $10,000.

The Commission vote to accept the settlement was 5-0. The complaint and settlement were filed by the Department of Justice at the request of the FTC. They were filed in U.S. District Court for the Northern District of Iowa, Western Division in Cedar Rapids, on February 13, 2002.

NOTE: A consent decree is for settlement purposes only and does not constitute an admission by the defendant of a law violation. Consent decrees have the force of law when signed by the judge.

Copies of the complaint and consent decree are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. The FTC works for the consumer to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1-877-382-4357), or use the complaint form at http://www.ftc.gov. The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

(FTC File No. 012 3026)
(Civil Action No. C02-4008DEO)