January 27, 2022

Volume XII, Number 27

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OpenX Ad Exchange Settles With FTC Over Alleged COPPA and Other Violations

OpenX Technologies recently agreed to pay $2 million to settle FTC allegations that the advertising platform violated the FTC Act and the Children’s Online Privacy Protection Act. OpenX runs a programmatic ad exchange, running a bidding platform that auctions online ad space. The company contracts with publishers who have open ad space as well as ad networks with inventories of ads they are seeking to publish online.

According to the FTC, while OpenX indicated in its privacy policy that users could opt out of having location information collected or used by “using the location service controls in your mobile device’s setting” in fact, it continued to collect and use location information from those who had followed the opt-out process. The FTC argued this was deceptive in violation of Section 5 of the FTC Act.

In addition, according to the FTC, OpenX posted ads on sites that its human quality team identified as child-directed. The FTC complaint indicated that millions (if not billions) of ad requests were received from these sites and aps, and these bid requests contained personal information of children. Ads were then placed on those sites. The FTC found that because of the placement of programmatic ads on these child sites, OpenX needed to have complied with COPPA’s parental notice and consent requirements, since the serving of these ads involved the collection of personal information from children. The FTC found incorrect the standard language OpenX had in its privacy policy. Namely, stating that the company did not “engage in activities that require parental notice or consent” under COPPA.

In addition to the monetary penalty, OpenX has agreed to delete all data that it collected in violation of the COPPA Rule. OpenX has also agreed to implement a comprehensive privacy program to ensure COPPA compliance.

Putting it into PracticeThis case serves as a reminder that the FTC will look closely at companies’ underlying technologies and practices when determining privacy compliance, including whether companies are adhering to their stated privacy notice. (In other words, not doing anything the FTC might consider a deceptive practice.) This case is also a reminder that the FTC takes the perspective that the serving of targeted advertising in many circumstances involves the collection of personal information.

Copyright © 2022, Sheppard Mullin Richter & Hampton LLP.National Law Review, Volume XII, Number 14
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About this Author

Liisa Thomas, Sheppard Mullin Law Firm, Chicago, Cybersecurity Law Attorney
Partner

Liisa Thomas, a partner based in the firm’s Chicago and London offices, is Co-Chair of the Privacy and Cybersecurity Practice. Her clients rely on her ability to create clarity in a sea of confusing legal requirements and describe her as “extremely responsive, while providing thoughtful legal analysis combined with real world practical advice.” Liisa is the author of the definitive treatise on data breach, Thomas on Data Breach: A Practical Guide to Handling Worldwide Data Breach Notification, which has been described as “a no-nonsense roadmap for in-house and...

312-499-6335
Snehal Desai, attorney, Sheppard Mullin
Attorney

Snehal Desai is an associate in the Intellectual Property Practice Group in the firm's San Francisco office. She is a member of the Privacy and Cybersecurity Team, the Advertising Team and the Technology Transactions Team.

Areas of Practice

Advertising: Snehal advises clients in conducting advertising campaigns, contests and sweepstakes, and brand marketing campaigns. 

Technology and Commercial Transactions: Snehal drafts and negotiates...

415-774-2960
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