FR 2025-04871

The Federal Trade Commission (FTC) has announced its intention to renew a vital regulation known as the Children's Online Privacy Protection Rule (COPPA Rule) with the Office of Management and Budget (OMB) for an additional three years. This rule plays a crucial role in safeguarding children's privacy online by ensuring that commercial websites obtain parental consent before collecting information from children under the age of 13. The public has until April 21, 2025, to submit comments on this proposed extension. Importantly, the FTC has indicated an increase in estimated annual costs and burden hours associated with complying with this rule, based on additional operators entering the market.

Significant Issues and Concerns

One of the pressing issues in the document is the significant increase in estimated annual burden hours from 17,600 to 26,600. This rise is attributed to an updated estimate of new operators coming under the regulation’s scope. However, if the estimation process is not precise, this could lead to unnecessary spending and increased operational demands on businesses.

The updated annual labor costs have also escalated from $8,687,169 to $14,381,493. If these estimates do not closely follow actual labor costs or if the estimation methods used are questionable, it could pose challenges in budgeting and resource allocation. Stakeholders might find these financial projections burdensome, especially if they do not reflect real costs businesses will incur.

The complexity of the language and the bureaucratic nature of the document could make it difficult for those without a legal background to grasp fully. References to specific sections and numerous footnotes add to this challenge, potentially creating a barrier for effective public engagement and response.

Public and Stakeholder Impact

The impact of extending the COPPA Rule is broad, aiming to continue protecting children’s privacy across digital platforms. Parents benefit from reinforced privacy protections, empowering them to make informed decisions regarding their children's digital interactions.

However, stakeholders like kidSAFE, a COPPA Safe Harbor program, have expressed concerns. They noted that the previous underestimation of the time and resources needed for compliance might not be fully addressed, particularly for audits and report preparations. While the FTC’s response clarifies the nature of their burden estimates, it might not ease the operational strain certain organizations feel.

Additionally, there are public comments suggesting the use of simpler language and formatting, and automated tools to minimize burdens, which the document does not robustly address. The lack of clarity on implementing these suggestions could mean continued complexity and potentially higher compliance costs for businesses.

Conclusion

In summary, while the FTC's intention is to bolster children’s online privacy through an extension of the COPPA Rule, the increased burden estimates and costs may concern businesses, especially smaller or less-resourced entities. The FTC’s engagement with public comments shows a willingness to refine the rule, but there remains a need for clearer strategies and actions based on stakeholder feedback. Better engagement, transparent communication, and practical implementation of suggested improvements could further enhance the rules’ effectiveness and stakeholder buy-in. The FTC faces the challenge of balancing regulatory oversight with practical implementation measures that minimize the burden on businesses while continuing to protect children's privacy online.

The Federal Trade Commission (FTC) has released a notice requesting the extension of the current Paperwork Reduction Act (PRA) clearance for the Children's Online Privacy Protection Rule (COPPA Rule) for an additional three years. In examining the financial aspects highlighted in the document, several points regarding estimated costs and financial allocations are worth noting.

Estimated Annual Labor Costs

The document specifies that the estimated annual labor costs associated with the COPPA Rule stand at $14,381,493. This marks a significant increase from the previous estimate of $8,687,169 noted in the September 2024 Notice. This rise can be attributed to various factors, including an increased number of covered entities and adjustments in the estimated hourly wage rates for legal counsel, technical personnel, in-house lawyers, and compliance officers. This financial adjustment points to potential complexities or changes in the operational landscape regarding the COPPA Rule, which necessitates a reevaluation of labor needs and cost allocations.

Increase in Estimated Annual Burden Hours

Along with the increase in labor costs, the estimated annual burden hours have risen from 17,600 to 26,600 hours. This adjustment stems from an updated estimate of the number of new operators subject to the COPPA Rule annually. Such an increase underscores a need for enhanced compliance efforts and additional resources, although it does raise questions about whether these projections accurately reflect real-world requirements. The increment suggests a recalibration of workload expectations, likely leading to the observed hike in estimated labor costs.

Stakeholder Feedback

Feedback from stakeholders, such as kidSAFE, highlights concerns about underestimated time burdens for Safe Harbor programs. The stakeholders’ suggestions that the hourly wage of compliance officers, estimated at $38.55, may be too low further emphasizes discrepancies in financial forecasting. This financial aspect highlights a potential misalignment between estimated and actual costs, which may lead to strained resources if not addressed correctly. This concern remains somewhat unaddressed by the Commission, which did not clarify the rationale or provide transparent data sources to counter these claims effectively.

Considerations for Financial Allocation

While the notice reflects increased financial allocations, it seems there is still a gap in fully incorporating the insights and recommendations from public comments. The stakeholders have voiced practical suggestions, such as employing digital tools to automate data entry, which could potentially streamline processes and optimize spending. However, the document lacks concrete plans or timelines to implement these financial efficiencies.

In summary, the financial references in this notice reveal an upward adjustment in both estimated labor costs and burden hours. These figures are pivotal for ensuring compliance with the COPPA Rule but also spotlight potential discrepancies in financial estimations and the importance of addressing stakeholder feedback to optimize financial allocations efficiently.