OpenX, a Pasadena-based ad tech company, agreed to pay $2 million to settle allegations that it amassed troves of data on children as it flaunted regulations intended to protect data privacy.
The venture-backed firm used code to “inadvertently” pull location specific data from users even when they opted out and sold children’s data to third party advertisers.
Once alerted of the practice by Google, which initially discovered the leak in October 2018, the company put barriers in place to end the breach.
“To put it plainly, it was a mistake,” the company admitted in a Tuesday blog post. “In this situation, an unintentional error was made.”
The company boasts that it’s the largest ad exchange offering advertisers targeted demographics or audiences.
Since its inception in 2008, OpenX has raised $85 million in venture funding, including Samsung Ventures, Accel Partners and Wavemaker Partners, among others, according to Pitchbook.
“We take this matter incredibly seriously, and since we have always held ourselves to the highest quality standards, we thought it would be helpful to provide some context and background about what happened and what we have done about it,” the company stated.
Bottomline: The company says “a very small percentage of our ad requests” came from apps that targeted kids.
Nonetheless, since the ad requests came from apps directed at children, the Federal Trade Commission concluded after an investigation that OpenX did not put in place sufficient safeguards or have a privacy policy in place that sought the permission of parents to release the data.
The failure to protect kids under the age of 13 violated the Children’s Online Privacy Protection Act of 1998, also known as COPPA, according to the FTC in a settlement filed on Dec. 15 with the U.S District Court in Los Angeles.
The law details what a website operator must include in a privacy policy, when and how to seek consent from a parent or guardian, and what responsibilities an operator has to protect children's privacy and safety online.
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