AOL Obliged to Pay a Record-Breaking $5 Million Fine for Children Privacy Law Violations

By Bill Toulas / December 7, 2018

AOL is given a $4.95 million penalty for violating federal children’s privacy laws (COPPA), the largest fine of this kind, in the hope that it will act as a message bearer to everyone involved in web data management.

According to a press release by Attorney General Barbara D. Underwood, the Verizon subsidiary Oath, formerly known as AOL violated COPPA repeatedly, multidimensionally, and knowingly. The findings are the result of an extensive investigation by the AG office on AOL’s practices between the time period from October 2015 to February 2017. According to the revelations made, AOL conducted at least 1.3 billion auctions for children targeting ad spaces during the aforementioned period.

Based on what COPPA dictates, no online advertisers are allowed to violate privacy regulations that concern children under the age of 13. This law was enacted in 1998, specifically for the protection of children’s online privacy. Thus, it is illegal for websites to collect children personal information and monitor their browsing history. To strengthen the law and address new concerns, the legislators added the inclusion of cookies and IP addresses in the forbidden information context in 2013. This practically means that AOL has no excuses as the period of AG’s investigation focuses on a date that comes after the latest amendment.

The results of the investigation indicate that AOL was treating children as adults, paying no regards to the COPPA regulations, collecting and sharing their personal information with advertisers. The latter (also in violation of the COPPA) served targeted ads to the children on hundreds of websites that are specifically aimed at children under the age of 13, so they are obviously covered by COPPA.

Moreover, AOL was found to auction off this ad space to advertisers, blatantly violating the law through common online advertising practices that completely ignore COPPA policies. The number of ad space auctions conducted by AOL within the investigated period is estimated to be at least 750 million. The report goes on to detail how an AOL account manager knowingly violated COPPA to increase the advertising revenue for AOL by transforming an online tracking tool code to an even more privacy-violating one.

AG concludes that AOL was utterly ignoring COPPA as if it is not an effective legislation, announcing hefty settlements that will hopefully resonate throughout the industry as a warning message to all. This comes only as a part of the Attorney General’s office continuous effort to protect children’s privacy rights. Last year, the same office bashed Hasbro, Mattel, JumpStart, and Viacom for similar reasons. This time though, the penalty is more than 5 times higher, as companies may have previously figured that the gains from targeted advertising on children would be higher than the losses due to fines.

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