Come April 21, will face a new challenge -- as if constantly coming up with "kewl" features for its ever-changing young audience wasn't hard enough. As of that date, the one-and-a-half-year-old Internet playground and search engine for kids ages 6 to 13 will have to comply with the Children's Online Privacy Protection Act (COPPA). COPPA, which emerged in response to widespread concern about the unregulated online collection of information from children, requires that commercial Web sites catering to the under-13 crowd obtain "verifiable parental consent" before collecting any information that could be used to identify or contact their preteen users. That includes the child's name, telephone number, and E-mail and street addresses.

While COPPA imposes the same requirements on all kid-oriented sites, two factors make the burden especially hard for smaller businesses to bear. One is cost. For instance, if adds 1,000 members a day, the company would be looking at a compliance cost of at least $240,000 a year, including the tab for records storage and for five new employees, says cofounder Steven Bryan. But a larger problem is the potential loss of traffic. Once parents start receiving those permission requests, says Bryan, familiar brands like Disney will have an advantage over relative unknowns. That could spell trouble for sites that, like, rely primarily on advertising revenues to stay afloat. Compounding the problem is the fact that some kids may choose to evade the consent process by heading for sites designed for teens or adults. Jorian Clarke, founder of Milwaukee-based, a five-year-old online activities center for kids, dubs the dynamic the "peas and ice cream factor." "If everything on a site becomes peas," she explains, "kids are going to be looking elsewhere for the kind of content that meets their dessert needs."

Clarke worries that COPPA, which layers on extra costs, will help transform the Net into a playing field where only the large can compete. But others take a more optimistic view. Elizabeth Lascoutx, who directs the Children's Advertising Review Unit at the Council of Better Business Bureaus, believes that the cost of complying with COPPA will soon decline. "I don't think COPPA will have an enormous impact on the industry," she says, "except for increasing parents' comfort level with letting their kids surf the Web."

In fact, Bryan, who like Clarke supports COPPA's goals, even sees a bright spot in the law. COPPA allows sites to retain information collected before April 2000 without obtaining parental consent. But's new competitors will have to comply with COPPA from day one. With 250,000 registered members as of January, Bryan observes, "I now have a position that is going to be very, very hard for a start-up to match."

Getting into the Act

If your business must comply with COPPA, consider these tips from Toby Levin, team leader for Internet advertising at the Federal Trade Commission:

  • Decide whether you need identifying information at all. There are lots of ways to provide content that don't require you to collect information. For example, if you want your site to offer kids a personalized greeting, use screen names, not real ones.
  • Take a look at the exceptions to the consent rule. For example, you can collect a child's E-mail address in order to respond to a onetime request. If you delete the address after responding, you won't trigger the other requirements of the rule.
  • Consider methods other than print-and-send for collecting information, such as toll-free numbers, credit-card verification, or E-mail accompanied by a digital signature.

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