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AOL/Verizon to Pay Record Fine for Tracking Kids Online

AOL, a Verizon-owned company, has agreed to pay a fine of $4.95 million for helping advertisers track children online.

It sounds like a lot of money, but it also sounds criminal. Isn't "tracking children" the same as "stalking children"?

Technically, they are different but in the court of public opinion it is all bad. And for Verizon, it's all the same: more bad news.

Children's Privacy

Verizon is paying for the largest-ever fine under the Children's Online Privacy Protection Act. It "prohibits operators of certain websites from collecting, using, or disclosing personal information (e.g., first and last name, email address) of children under the age of 13 without first obtaining parental consent."

According to officials, AOL violated the law by using display ad exchanges to conduct billions of auctions for ad space on websites targeting children. AOL knew these websites were directed at children under 13 because it had conducted an internal review of the content and privacy policies of client websites.

"Through these auctions, AOL collected, used, and disclosed personal information from the websites' users in violation of COPPA, enabling advertisers to track and serve targeted ads to young children," the New York Attorney General's Office announced.

In addition to paying the fine, the Verizon company agreed to "adopt comprehensive reforms" to protect children from improper tracking.

More Bad News

Announcement of the privacy violation came at a bad time for Verizon. Earlier in the week, J.P. Morgan downgraded Verizon and sent stocks down. Analyst Philip Cusick cut his rating on Verizon shares to neutral.

"As much as we like Verizon's consistent and improving execution, the combination of a new management team and reporting lines with the run-up in shares make the risk/reward less compelling than peers AT&T and Comcast," he wrote.

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