The FTC’s COPPA Conundrum: Ambiguities in the Rule and a Death of Authoritative Guidance Leave the Agency Vulnerable to Legal Challenges

This article was originally published by the ABA’s ANTITRUST magazine in its Summer 2022 issue.

The Children’s Online Privacy Protection Act (COPPA) and the Federal Trade Commission’s COPPA-enforcing rule have increasing relevance for all businesses that interact directly with consumers online—including companies that do not regard themselves as marketing directly to children. Both the FTC and state Attorneys General are active in enforcing COPPA, and companies can often be caught off guard by government inquiries scrutinizing their compliance. Achieving compliance, however, is not always straightforward, in part due to a lack of clarity in the FTC’s rule and related guidance. In this article recently published in the ABA’s ANTITRUST magazine, Sean Royall, a co-leader of Sidley’s Antitrust and Consumer Protection practice, explains why the FTC may be vulnerable to legal challenges in COPPA cases. To date, no party has ever litigated with the FTC on COPPA issues, yet the FTC has compiled an impressive list of settlements. The article explores why the FTC, if forced to litigate, could be vulnerable to arguments that it has failed to provide adequate notice of the standards it seeks to enforce. While written in the COPPA context, this article has broader application to FTC rulemaking and enforcement issues, particularly as the agency has shifted more heavily to reliance upon civil penalties as a means to obtain monetary awards. As pointed out in the article, for the FTC to obtain civil penalties in most cases, it must prove that the defendant engaged in knowing rule violations, a standard that may be difficult for the FTC to meet when the rules it enforces are subject to multiple reasonable interpretations.