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ANNAPOLIS, Md. — Maryland lawmakers questioned potential inconsistencies between the FTC’s Children’s Online Privacy Protection Act (COPPA) rule and HB-316, a state bill that would extend the rule’s protections to Maryland children. The bill was introduced by Chairman Dereck Davis, a Democrat, of the House of Delegates Committee on Economic Matters, which held a Wednesday hearing on the legislation. It and its companion bill in the state Senate, SB-374, are supported by Doug Gansler, the state’s Attorney General, who testified that he suggested changes to the bill based on feedback from opponents.


The bill would make COPPA violations illegal under state law and would require that “advertising on the Internet targeted to children under the age of 13 be clearly labeled as advertising,” Davis said. The bill would extend COPPA protections to the state’s children, meaning COPPA violations could be prosecuted in state courts, Gansler told the committee. If his office and its consumer protection division don’t get this authority, it has to rely on the FTC to prosecute COPPA violations, even when victims are Maryland residents, he continued. “We’re not going to deviate at all from the federal law or the federal standard.”Is the bill inconsistent from COPPA by requiring websites to comply if they “know or have reason to know” that they’re interacting with Maryland-based users under the age of 13, asked Del. Brian Feldman. An earlier draft of the new federal COPPA rule included this “reason to know” standard, which was struck before the FTC released the final rule. Gansler acknowledged that it might create an inconsistency, and said his office has already agreed to remove that language from the bill.


The bill goes further than COPPA by requiring websites to clearly label ads as such when dealing with Maryland-based child users, Gansler said, which was not included in COPPA. “Companies are very crafty in their attempt to advertise to children,” he said, saying websites often disguise ads as other site elements, such as user-generated content. As children get older, they are better able to discern what content is actually advertising, but young users — especially those under 13 — need additional protection, he said. “When you’re a seven-year-old, you don’t necessarily know what’s an advertisement and what’s not.” Requiring this kind of advertising disclosure “isn’t a burden to the company,” Gansler said. “That doesn’t seem like a particularly burdensome thing for companies inside or outside of Maryland.” Gansler also said the bill was aimed at protecting kids from “bad advertising.” He compared children’s websites to Sunday morning cartoons, where parents can expect their children will be spared from seeing violent or otherwise inappropriate commercials. Laura Moy, a graduate fellow at Georgetown Law’s Institute for Public Representation, speaking on behalf of the Center for Democracy and Technology, agreed children have a harder time than older users distinguishing between ads and website content due to their “limited developmental capacity,” which is “compounded by contemporary marketing practices.”


“We can’t put a barricade on the Internet in the state of Maryland,” said Del. Kelly Schulz, a Republican. This bill would affect businesses all over the country and world by requiring them to know when they’re interacting with Maryland children and alter their website accordingly, she said: Will businesses in other states know that Maryland passed this bill and that it applies to them? Gansler said businesses in other states would know and would be able to label their ads as such.


Economic interests do not outweigh concerns about children’s privacy online, said Del. Donna Stifler, a Republican, after Application Developers Alliance Vice President of Law, Policy and Government Relations Tim Sparapani testified there are an estimated 8,000 app developers in Maryland. “I don’t really care about those 8,000 people if they’re going to infringe on my children’s privacy,” Stifler continued, saying she considers herself a pro-business lawmaker.


State courts need guidance in the law to follow the FTC’s interpretations if they begin prosecuting COPPA violations, said Jim Halpert, general counsel to the State Privacy and Security Coalition. As an example, Halpert pointed to language in the law that would require websites to get verifiable parental consent to collect information from child users. “There are pages of regulation about what [verifiable parental consent] means” from the FTC, and Maryland courts should have to follow those interpretations to make sure the laws are consistent beyond containing identical language, he said. “The bill as introduced is very different than COPPA.” He acknowledged the language changes Gansler said he made but which were not introduced in time for the hearing. Halpert told us he’s working with Gansler’s office on the ad disclosure language.


The bill could harm Maryland’s “incredible vibrant” app industry, Sparapani told the committee, calling it “a signal that we don’t want to send that is discouraging to these vibrant businesses.” App developers who currently reside in or would consider moving to Maryland may reconsider if the state passes “hostile” legislation, he said. The alliance is “eager to work with you to find a way to increase children’s privacy in Maryland, but not at the cost of doing damages,” he said.


Bills like these will just keep companies from making their online services available to children, said Josh Matthews, Application Developers Alliance board member and CEO of app-analytic firm Apkudo. “When you have a nascent industry … from a policy perspective, what’s most important is that you support that industry and that you don’t shackle it,” he said. App developers will have “an immense amount of trouble” determining if a user is a Maryland-based child under the age of 13 and obtaining verifiable parental consent, he continued. 


The bill might result in “fewer services and [less] innovation” for children, said Carl Szabo, policy counsel for NetChoice. “If we are going to pass legislation, I would actually suggest that we give the attorney general more money to engage in enforcing the laws that are already on the books” and create educational programs for online companies and parents, he said. 


— Kate Tummarello


Communications Daily – Feb. 7, 2013