Kids in the Cookie Jar: What Silicon Valley Teaches about COPPA

HBO’s Silicon Valley has a way of effectively teaching legal lessons while still being fucking hilarious. This week it explored Terms of Service.

Silicon Valley is oftentimes a legal show as much as it’s a startup or tech show. Episode titles like “Fiduciary Duties,” “Binding Arbitration,” and last week’s “Terms of Service” are enough to make any corporate attorney drool. In this season’s latest installment, the team at Piper Chat again finds itself in a heap of legal trouble when it’s revealed that new CEO Dinesh’s dismissal of important legal issues means their app has no terms of service users must agree to before signing up. As we wrote just yesterday, terms of service and privacy policies set expectations on both the company’s and user’s end as to who is using the service, what data is being collected and shared, and other user guidelines. Failure to do this exposes a company to any number of legal risks and fails to limit their liability should a user abuse the provided service. Dinesh learns this the hard way.

To be among the big boys, sometimes you gotta lawyer up like the big boys.

Was Dinesh Really on the Hook for $21 Billion?

[ALERT: SPOILERS AHEAD]

Last week’s episode provided a stark reminder of the importance of having a proper and complete terms of service (something we wrote about just yesterday, before we had watched the episode) on your website. New CEO Dinesh was so hyped about user growth that he didn’t want to get bogged down in “legal bullshit” like having users agree to a ToS before registering for Piper Chat (where’s Ron LaFlamme when you need him?). This meant users could sign in to the service without agreeing to abide by an age limit or a code of conduct. Having users agree to a ToS can shield the company from liability should a user break the terms. When it’s discovered that many of Piper Chat’s new users are girls under the age of 13, Dinesh finds himself in a different type of legal shit: the Children’s Online Privacy and Protection Rule, which requires companies garner parental consent if collecting personal data from children under the age of 13. Dinesh is worried he might be held personally liable for a $21 billion fine from the FTC, and he should be worried.

One of our favorite scenes with our favorite attorney, Ron LaFlamme.

The last time the law was publicly enforced against four companies with popular children’s websites, Hasbro, Viacom, Mattel and Jumpstart, the group was held liable for a collective $850,000. These are gigantic companies with a large foothold in the children’s entertainment business, presumably more so than young Piper Chat. So while Dinesh, and now Gavin Belson, certainly should be worried about the bad PR such a slip up would garner, it’s not clear it’s a $21 billion mistake. We’ll see how Gavin’s team of well-heeled lawyers react to the ill-informed purchase this Sunday. Check back here for more in-depth legal analysis of the Piper gang’s latest tribulations.

Check out our full post about Terms and Conditions and Privacy Policies here:

Have any more legal questions? Sandy the Squirrel, our legal bot, can answer them instantly, or connect you with a legal researcher who can help find more information on your question in 24 hours.

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