Yelp Inc (NYSE:YELP) Charged With Improperly Gathering Data On Children

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By Mark Michaels on September 18, 2014 Company

Yesterday on Wednesday, September 17^th, Yelp Inc (NYSE:YELP) was fined on the charge that the company had gathered children’s information online with improper procedures.

Yelp is a popular online review site and the founder of multiple mobile device apps aimed at children, including Tiny Monsters and Tiny Pets.

The United States Federal Trade Commission stated that companies that collect online information about children who are younger than the age of 13 must follow a procedure of steps in order to make sure that the children’s information is protected. This regulation is known as COPPA, or the Children’s Online Privacy Protection Act.

According to the terms of the settlement, Yelp is forced to pay a civil penalty of $450,000, while the app developer TinyCo, which is privately owned, must pay a civil penalty of $300,000.

The Federal Trade Commission stated that Yelp gathered personal information from children through the Yelp app without notifying parents first and obtaining their explicit consent. The company engaged in these acts between the years of 2009 and 2013.

The number of people who registered and provided a birth date signifying that they were under 13 years old totaled to several thousand. Nonetheless, Yelp gathered certain information about them, including location and email address, and any additional information they may have posted on the site.

Also, Yelp agreed to delete the information it gathered from consumers who said that they were ages 13 years old or younger when they registered for an account with the company.

According to a statement made by the vice president for communications of Yelp, Vince Sollitto, when this issue was brought to the attention of management, they immediately fixed it and shut down the relevant accounts. He stated that Yelp does not promote itself as a place for children.

According to John Feldman, an attorney at Reed Smith, the key deciding issue for the Federal Trade Commission was not whether or not Yelp tried to use its registration process as a filter for age. Rather, the reason for the FTC’s concern is that where the company asks for and obtains the information within the registration process to know if the user is under age or not, the FTC will consider the company to have actual knowledge that the children are providing them their personal information.

John Feldman is not one of the attorneys assigned on the case, but has extensive experience and specializes in advertising issues of corporations.

After news of this incident broke, Yelp’s shares had increased by 0.3 percent in afternoon trading to $76.79.

The Federal Trade Commission’s allegations against TinyCo claimed that the company targeted young minors with many of its features and apps by displayed brightly colored animated characters, which made it and its actions subject to rules under the COPPA.

Many of these applications have download counts of more than 34 million tonnes. These apps include a feature, that is optional, that collects email addresses from users, which includes those younger than 13 years of age.