AI is transforming how children learn and interact online, but it raises serious privacy concerns. In the U.S., the Children's Online Privacy Protection Act (COPPA) protects kids under 13 by requiring parental consent for data collection. Starting in 2025, fines for violations can reach $53,088 per incident. Many states are also introducing stricter rules, such as age verification and limits on data use for minors. To comply, AI companies must:
- Get verifiable parental consent before collecting data.
- Limit data collection to what's absolutely necessary.
- Provide clear, child-friendly privacy notices.
- Use strong security measures to protect data.
Failing to comply has led to major fines, such as Google and YouTube's $170M penalty in 2019. AI companies must prioritize children's privacy to avoid legal risks and protect young users.
Quick Overview:
| Key Rule | Requirement |
|---|---|
| Parental Consent | Required for kids under 13. |
| Data Retention | Limit how long data is stored. |
| Privacy Notices | Must be clear and easy to understand. |
| State Rules | Stricter protections in many states by 2025. |
Privacy challenges like profiling, surveillance, and misuse of AI systems (e.g., generative AI and chatbots) worsen risks for children. Companies must integrate privacy protections into their systems from the start.
COPPA Compliance with Spectrum Labs AI
COPPA Rules and Requirements
The Children's Online Privacy Protection Act (COPPA) sets strict rules for companies managing children's data. Starting in 2025, violations can lead to civil penalties of up to $53,088 per incident. This makes compliance a top priority for AI firms handling data from children under 13.
What COPPA Requires from AI Companies
AI companies must implement strong privacy protections. Here are the key requirements:
| Requirement | Description |
|---|---|
| Privacy Notice | Clear, visible policies explaining how data is collected, used, and shared. |
| Parental Consent | Verifiable consent must be obtained before collecting children's personal data. |
| Data Retention | Policies that define how long data is kept and when it will be deleted. |
| Security Measures | Strong safeguards to protect the confidentiality and security of children's data. |
| Third-Party Oversight | Written guarantees from partners to follow data security standards. |
Parents must be informed about data practices and given options to review or delete their children's information. Additionally, COPPA forbids using children's personal data for marketing or targeted ads.
Despite these guidelines, compliance remains a challenge for many.
Common COPPA Compliance Issues
Even with clear rules, violations still happen. For example, in 2022, WW International faced a $1.5 million penalty for COPPA violations through their Kurbo app. The case highlighted the importance of deleting improperly collected data and any AI models trained on it.
Some common compliance problems AI companies face include:
- Weak Consent Systems: Failure to set up effective parental verification processes.
- Unclear Privacy Policies: Not adequately explaining how data is collected or used.
- Improper Data Retention: Keeping children's data longer than necessary.
- Non-Compliant AI Training: Using children's data in AI models without explicit parental approval.
The KidGeni case in August 2023 is another example. The company collected children's data through multiple channels without parental consent. In response, KidGeni introduced measures like requiring parental approval before using data for AI training.
"The Commission's actions reflect its commitment to using all its tools to keep kids safe online." – Lina M. Khan, FTC Chair
To avoid these pitfalls, AI companies should design platforms with children's privacy as the default. This includes using age-appropriate language to explain data practices and enforcing strict controls on data collection and retention.
Privacy Risks in AI Systems for Children
As children increasingly interact with AI, privacy concerns grow. Beyond meeting legal requirements, AI systems introduce privacy challenges specific to younger users. Recent research highlights a concerning trend: while 70% of teens use generative AI, only about one-third of parents are aware of their children's engagement with these technologies.
AI Decision-Making Risks for Children
AI systems play a growing role in shaping children's online experiences, often through automated decision-making. While these systems may offer convenience, they also introduce serious risks to privacy and autonomy:
| Risk Category | Description | Impact |
|---|---|---|
| Surveillance | Automated monitoring of online behavior | Tracks behavior patterns and personal preferences |
| Profiling | Unconsented profiling | Builds detailed behavioral profiles without consent |
| Automated Decisions | Decisions impacting opportunities | Influences educational and social opportunities |
For example, tests have shown that Snapchat's AI friend and Amazon Alexa have provided inappropriate advice and even dangerous instructions to children.
"Children are highly susceptible to these techniques which, if used for harmful goals, are unethical and undermine children's freedom of expression, freedom of thought and right to privacy."
– UNICEF
These risks only add to the broader privacy concerns surrounding AI systems.
Understanding AI Systems' Data Use
AI's handling of data introduces additional privacy threats, particularly for children:
- Deepfakes and Impersonation: AI can create fake identities that mimic peers, potentially leading to deception.
- AI-Driven Grooming: Predators may exploit AI to analyze children's data for targeted grooming.
- Emotional Analysis: AI increasingly collects emotional and biometric data, further exacerbating privacy issues.
One major issue is the gap between children's usage of AI and their parents' awareness.
"As parents, we can't ignore the concerning impact of AI on child sexual abuse and online exploitation. It's crucial for us to stay informed, have open conversations with our kids, and actively monitor their online activities. By taking a proactive role, we contribute to creating a safer digital space for our children in the face of evolving technological challenges."
– Phil Attwood, Director of Impact at Child Rescue Coalition
Additionally, testing by the Center for Countering Digital Hate revealed that Google's Bard provided misinformation in 78% of cases when prompted with harmful narratives, often without any disclaimers.
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State Privacy Laws and AI Rules
As the digital world evolves, state-level laws are stepping up to fill gaps left by federal regulations, pushing AI companies to adopt stricter safeguards for children's data. While COPPA sets the national standard, individual states are adding their own layers of rules that influence how AI companies handle data.
State vs. Federal Privacy Rules
State laws, like California's CCPA, build on federal frameworks such as COPPA, introducing more detailed and stringent requirements. For example, the CCPA applies to businesses operating in California that meet specific criteria, such as earning $25 million or more annually, handling data for 100,000+ residents, or generating at least 50% of their revenue from selling personal data. Here's how the two compare:
| Requirement Type | Federal (COPPA) | California (CCPA) |
|---|---|---|
| Age Verification | Basic guidelines | Explicit verification for users 16+ |
| Consent Type | Parental consent for under 13 | Opt-in required for users under 16 |
| Knowledge Standard | Actual knowledge | Stronger actual knowledge requirement |
| Enforcement | Federal only | Both state and federal enforcement |
Navigating State-Specific Requirements
Different states are introducing tailored rules to address privacy concerns, particularly when it comes to protecting minors from harmful content. Here are some key examples:
-
California's Enhanced Protections
- Requires opt-in consent for users under 16
- Mandates active age verification
- Parental consent is a must for users under 13
-
Texas SCOPE Act (starting September 1, 2024)
- Digital services must secure parental consent before sharing minors' personal information
- Parental control tools for privacy settings are required
- Extra safeguards for interactions with AI products
-
New Jersey and Maryland Rules
- New Jersey demands affirmative consent for targeted activities involving users aged 13-17
- Maryland bans the use of data for targeted advertising aimed at users under 18
To stay compliant across these varied laws, AI companies need to invest in robust systems, including:
- Reliable age verification tools
- Standardized opt-out mechanisms
- Regular Data Protection Impact Assessments
- Clear parental consent processes
- Careful review of data-sharing agreements with third parties
The push for stricter privacy measures shows no signs of slowing down. States like Illinois, South Carolina, and Vermont are exploring age-appropriate design codes. For AI companies, this means staying agile and proactive to meet the growing patchwork of state-level privacy rules.
How AI Companies Can Protect Children's Data
As AI becomes a bigger part of children's lives, companies must go beyond basic compliance to protect their privacy. Here's how they can safeguard children's data while still offering useful services.
Building Privacy into AI Systems
Privacy should be a priority from the start. Companies need to design AI systems with protections already in place, considering how they collect and handle children's data.
Here are some key steps:
- Default Privacy Settings: Optional data collection should be turned off by default and only enabled with valid consent.
- Child-Friendly Design: Use simple language and icons that children can easily understand to explain data collection.
- Minimal Data Collection: Gather only the data that's absolutely necessary.
- Regular Privacy Audits: Conduct Data Protection Impact Assessments before launching new features.
"… we should be able to protect our children as they use the internet. Big businesses have no right to our children's data: childhood experiences are not for sale." - California Attorney General Rob Bonta
Once these privacy measures are in place, the next step is to ensure accurate age verification and secure data management.
Age and Parent Verification Methods
Companies use several methods to verify age and parental involvement:
| Verification Method | How It Works | Security Level |
|---|---|---|
| Behavioral Analysis | AI analyzes usage patterns and content interaction | Medium |
| Parental Verification | Multi-step process with ID checks | High |
| Third-Party Services | Partnering with specialized verification providers | High |
| AI Facial Estimation | Optional analysis using facial data | Medium |
For example, Google uses AI to analyze user behavior, like search habits, to estimate age. Meta, on the other hand, uses social vouching and partners with companies like Yoti for advanced verification.
Once verification is complete, companies must follow strict rules for how they handle data.
Data Collection and Storage Rules
Handling children's data securely means following strict rules for collection, storage, and deletion. Companies should:
- Use Strong Security Measures: Encrypt data and use access controls to keep it safe.
- Minimize Data Retention: Keep children's data only for the time it's needed.
- Supervise Third Parties: Regularly check and monitor any third-party services that access children's data.
- Offer Parental Controls: Allow parents to manage privacy settings for their children.
For instance, TikTok uses a multi-layered system that includes both automated scans of public videos and manual verification by trusted adults. This ensures accurate age reporting while protecting privacy.
Companies should avoid tracking precise locations or profiling behavior unless absolutely necessary for core features.
Summary and Next Steps
Key Takeaways for AI Companies
Recent enforcement actions, such as Epic Games' $275 million penalty under COPPA in 2022 and fines reaching up to $42,530 per violation, highlight the strict regulatory landscape.
AI companies need to focus on these compliance areas:
| Focus Area | Required Actions |
|---|---|
| Age Verification | Implement strong systems for verifying user age. |
| Parental Controls | Offer tools for parents to manage online activity. |
| Data Retention | Create clear policies for data collection and deletion. |
| Security Program | Maintain a written program for information security. |
State-level compliance is equally crucial. For instance, Texas enforces privacy laws like HB 1181, which requires age verification to limit access to harmful content. This law was presented before the Supreme Court in January 2025.
These priorities are essential when choosing tools to ensure compliance.
Best AI Agents: Your Go-To for AI Solutions
To meet these requirements, companies can turn to resources like Best AI Agents. This directory offers a curated list of AI tools across categories, including both open- and closed-source options, with a focus on privacy-first solutions for education, customer service, and beyond.
When evaluating tools on platforms like Best AI Agents, companies should look for:
- Strong default privacy settings
- Reliable age verification systems
- Clear parental consent processes
- Transparent data practices
- Secure data storage and deletion policies
These steps can help companies navigate the complex regulatory environment while safeguarding user privacy.
