The world is flat and getting flatter.

Technology is and continues to bring people together in unprecedented ways. It is exciting because it opens new markets and allows businesses to attract new consumers. It can also be troublesome, as privacy issues surrounding the collection and use of our customers' private data is becoming more of a concern. This is especially true as it pertains to children's privacy.

There currently exists very strict regulations surrounding children's online privacy. The Children's Online Privacy Protection Act (COPPA) is a set of regulations handed down by the Federal Trade Commission (FTC) that puts "certain requirements in place if you operate a website or online service directed to children under 13 or if you have actual knowledge that you're collecting personal information online from kids in that age group."

So while you may not operate a website that is directed to children, how can you be sure the information you are or will be collecting isn't from children? These days, it is very difficult to say for sure, especially when considering the extent to which young generations are "connected." Consider, for example, that "Generation Z" (children born after 2000) and later "Millennials" are the first generation of children to never have known a time without technology or the Internet.

I'll give you a second to let that sink in, my fellow middle agers.

Kids these days are hyper connected and sharing information more freely than older (or as I call "more experienced") generations. Technology is completely integrated into their lives, as evidenced nicely by the infographic below. As it suggests, 94 percent of children own a cell phone, while 70 percent own a laptop. They interact via technology, sending as many as 167 text messages per day! (I counted yesterday, and I sent four...and one was to correct an error generated by the iPhone autocorrect). And, as smart devices and ubiquitous data plans continue to proliferate our lives, one can only imagine how future generations will be affected.

 

These days, COPPA applies mostly to online games, social networks, and services aimed at children under thirteen. Our company, Wild Creations, which produces products that are marketed to and consumed by children, and other similar companies might, however, be influenced by COPPA regulations. If you collect data from your consumers online, which most business do, you need to consider that you may be dealing with children at some point or another. When this happens, you need to be prepared.

In order to understand some of the potential challenges to small businesses, I spoke with Denise Tayloe, president and CEO of PRIVO, the first and only infomediary service to be recognized by the Federal Trade Commission (FTC) in regards to COPPA regulations.

What are the biggest threats small businesses and entrepreneurs face in regards to COPPA?

The process and effort to obtain parent consent presents a roadblock and hurdles for all constituents (i.e. children, parents and the company seeking informed consent and permissioned dialog). The dramatic drop off and cost to truly engage a parent and making sure they are who they say they are is something that needs to be addressed at an industry wide level.

Small businesses and entrepreneurs may be faced with having to prove to parents, potential partners, advertisers, and buyers that they are trustworthy and compliant with COPPA. They may need to invest in professional advice in advance to building their services.

With the social media landscape changing so rapidly, and children becoming more connected, what changes do you see coming?

Parents will have to become aware of how their children are authenticating themselves and sharing data to online services. In the offline world, parents recognize the need to engage and authorize their children's activities. The idea of a parent dropping off their kid on the internet and disconnecting themselves from their child's actions is not likely to be sustainable due to privacy protection laws like COPPA which will force parent engagement.

What can small businesses and entrepreneurs do to better prepare themselves?

If your target market is minors and you intend to engage them online, you will need to be COPPA compliant and can seek a safe harbor to certify your compliance and navigate the COPPA waters. At PRIVO, as a safe harbor, we help each individual client accomplish their business goals and excel in their marketing initiatives, while maintaining compliance and best practices.

I would add that if you are uncertain if COPPA applies to your business, it would be beneficial for you to discuss the matter with a professional. If you are so inclined to go it on your own, you could read the 167 page rule on the FTC website, which includes recent amendments from December 2012. Of course, if you are like me, there is the Cliff Note version, which includes the five need-to-know recent changes for businesses.

If you have thoughts about online privacy and how they are affecting your business, please share them below.