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United States v. Prime Sites, Inc.

United States District Court, D. Nevada

February 16, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
PRIME SITES, INC., a Nevada corporation, also doing business as EXPLORE TALENT, Defendant.

          CHAD A. READLER Acting Assistant Attorney General ETHAN DAVIS Deputy Assistant Attorney General GUSTAV W. EYLER Acting Director, Consumer Protection Branch KATHRYN A. SCHMIDT Attorneys for Plaintiff United States of America.

          MATTHEW H. WERNZ SAMUEL A.A. LEVINE Attorneys for the Federal Trade Commission.

          Karl Andersen, Esq. Andersen & Broyles, LLP Attorneys for Defendant Prime Sites, Inc.

          STIPULATION AND ORDER FOR PERMANENT INJUNCTION AND CIVIL PENALTY JUDGMENT AMENDED ECF NO. 2

         Plaintiff, the United States of America, acting upon notification and authorization to the Attorney General by the Federal Trade Commission (“Commission”), filed its Complaint for Permanent Injunction, Civil Penalties, and Other Relief (“Complaint”) in this matter, pursuant to Sections 13(b) and 16(a)(1) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 56(a)(1), the Children's Online Privacy Protection Act, 15 U.S.C. §§ 6502(c) and 6505(d), and the Commission's Children's Online Privacy Protection Rule (“COPPA Rule”), 16 C.F.R. Part 312. Defendant has waived service of the summons and the Complaint. Plaintiff and Defendant stipulate to the entry of this Stipulated Order for Permanent Injunction and Civil Penalty Judgment (“Order”) to resolve all matters in dispute in this action between them. THEREFORE, IT IS ORDERED as follows:

         FINDINGS

         1. This Court has jurisdiction over this matter.

         2. The Complaint charges that Defendant participated in deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45, by misrepresenting the benefits of paid membership in, and Defendant's practices relating to personal information collected from children in connection with, Defendant's online talent search network.

         3. The Complaint also charges that Defendant violated the COPPA Rule by failing to provide notice to parents of its information practices, and to obtain verifiable parental consent prior to collecting, using, or disclosing personal information from children.

         4. Defendant neither admits nor denies any of the allegations in the Complaint, except as specifically stated in this Order. Only for purposes of this action, Defendant admits the facts necessary to establish jurisdiction.

         5. Defendant waives any claim that it may have under the Equal Access to Justice Act, 28 U.S.C. § 2412, concerning the prosecution of this action through the date of this Order, and agrees to bear its own costs and attorney fees.

         6. Defendant and Plaintiff waive all rights to appeal or otherwise challenge or contest the validity of this Order.

         DEFINITIONS

         For the purpose of this Order, the following definitions apply:

         1. “Child” means an individual under the age of 13.

         2. “Collects” or “collection” means the gathering of any personal information from a child by any means, including but not limited to:

a. Requesting, prompting, or encouraging a child to submit personal information online;
b. Enabling a child to make personal information publicly available in identifiable form; or
c. Passive tracking of a child online.

         3. “Defendant” means Prime Sites, Inc., a corporation, also doing business as Explore Talent, and its successors and assigns.

         4. “Disclose or disclosure” means, with respect to personal information:

a. The release of personal information collected by an operator from a child in identifiable form for any purpose, except where an operator provides such information to a person who provides support for the internal operations of the website or online service; and
b. Making personal information collected by an operator from a child publicly available in identifiable form by any means, including but not limited to a public posting through the Internet, or through a personal home page or screen posted on a website or online service; a pen pal service; an electronic mail service; a message board; or a chat room.

         5. “Internet” means collectively the myriad of computer and telecommunications facilities, including equipment and operating software, which comprise the interconnected worldwide network of networks that employ the Transmission Control Protocol/Internet Protocol, or any predecessor or successor protocols to such protocol, to communicate information of all kinds by wire, radio, or other methods of transmission.

         6. “Obtaining verifiable consent” means making any reasonable effort (taking into consideration available technology) to ensure that before personal information is collected from a child, a parent of the child:

a. Receives notice of the operator's personal information collection, use, and disclosure practices; and
b. Authorizes any collection, use, and/or disclosure of the personal information.

         7. “Online contact information” means an e-mail address or any other substantially similar identifier that permits direct contact with a person online, including but not limited to, an instant messaging user identifier, a voice over internet protocol (VOIP) identifier, or a video chat user identifier.

         8. “Operator” means any person who operates a website located on the Internet or an online service and who collects or maintains personal information from or about the users of or visitors to such website or online service, or on whose behalf such information is collected or maintained, or offers products or services for sale through that website or online service, where such website or online service is operated for commercial purposes involving commerce among the several States or with one (1) or more foreign nations; in any territory of the United States or in the District of Columbia, or between any such territory and another such territory or any State or foreign nation; or between the District of Columbia and any State, territory, or foreign nation.

         9. “Parent” includes a legal guardian.

         10. “Person” means any individual, partnership, corporation, trust, estate, cooperative, association, or other entity.

         11. “Personal information” means individually identifiable information about an individual collected online, including:

a. A first and last name;
b. A home or other physical address including street name and name of a city or town;
c. Online contact information;
d. A screen or user name where it functions in the same manner as online contact information;
e. A telephone number;
f. A Social Security number;
g. A persistent identifier that can be used to recognize a user over time and across different websites or online services. Such persistent identifier includes, but is not limited to, a customer number held in a cookie, an Internet Protocol (IP) address, a processor or device serial number, or unique device identifier;
h. A photograph, video, or audio file where such file contains a child's image or voice;
i. Geolocation information sufficient to identify street name and name of a city or town; or
j. Information concerning the child or the parents of that child that the operator collects online from the child and combines with an identifier described in this definition.

         12. “Release of personal information” means the sharing, selling, renting, or transfer of personal information to any third party.

         13. “Support for the internal operations of the website or online service” means

a. Those activities necessary to:
i. Maintain or analyze the functioning of the website or online service;
ii. Perform network communications;
iii. Authenticate users of, or personalize the content on, the website or online service;
iv. Serve contextual advertising on the website or online service or cap the frequency of advertising;
v. Protect the security or integrity of the user, website, or online service;
vi. Ensure legal or regulatory compliance; or
vii. Fulfill a request of a child as permitted by Section 312.5(c)(3) and (4) of COPPA;
b. So long as the information collected for these activities listed in a (i) - (vii) is not used or disclosed to contact a specific individual, including through behavioral advertising, to amass a profile on a specific individual, or for any other purpose.

         14. “Third party” means any person who is not:

a. An operator with respect to the collection or maintenance of personal information on the website or online service; or
b. A person who provides support for the internal operations of the website or online service and who does not use or disclose information protected under this part for any other purpose.

         15. “Website or online service directed to children” means a commercial website or online service, or portion thereof, that is targeted to children.

         ORDER

         I. INJUNCTION CONCERNING COLLECTION OF PERSONAL INFORMATION FROM CHILDREN

         IT IS ORDERED that Defendant and Defendant's officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with being an operator of any website or online service directed to children or of any website or online service with actual knowledge that it is collecting or maintaining personal information from a child, are hereby permanently restrained and enjoined from:

A. failing to make reasonable efforts, taking into account available technology, to ensure that a parent of a child receives direct notice of Defendants' practices with regard to the collection, use, or disclosure of personal information from children, including notice of any material change in the collection, use, or disclosure practices to which the parent has previously consented;
B. failing to post a prominent and clearly labeled link to an online notice of its information practices with regard to children on the home or landing page or screen of its website or online service, and at each area of the website or online service where personal information is collected from children;
C. failing to obtain verifiable parental consent before any collection, use, or disclosure of personal information from children, including consent to any material change in the collection, use, or disclosure practices to which the parent has previously consented; and
D. violating the Children's Online Privacy Protection Rule, 16 C.F.R. Part 312, a copy of which is attached hereto as Appendix A.

         II. INJUNCTION CONCERNING DELETION OF CHILDREN'S PERSONAL INFORMATION

         IT IS FURTHER ORDERED that Defendant and Defendant's officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, are permanently restrained and enjoined from:

A. disclosing, using, or benefiting from children's personal information which Defendant obtained prior to entry of this Order; and
B. failing to destroy children's personal information that is in their possession, custody, or control within ten (10) days after entry of this Order. Provided, however, that such personal information need not be disposed of, and may be disclosed, to the extent requested by a government agency or required by law, regulation, or court order.

         III. MONETARY JUDGMENT FOR CIVIL PENALTY

         IT IS FURTHER ORDERED that:

         A. Judgment in the amount of Five Hundred Thousand Dollars ($500, 000) is entered in favor of Plaintiff against Defendant as a civil penalty.

         B. Defendant is ordered to pay to Plaintiff, by making payment to the Treasurer of the United States, Two Hundred Thirty-Five Thousand Dollars ($235, 000). Such payment must be made within ninety (90) days of entry of the Order, unless otherwise agreed to by counsel for the Commission, by electronic fund transfer in accordance with instructions previously provided by a representative of Plaintiff. Upon such payment, the remainder of the judgment is suspended, subject to the Subsections below.

         C. The Commission and Plaintiff's agreement to the suspension of part of the judgment is expressly premised upon the truthfulness, accuracy, and completeness of the following sworn financial statements and related documents (collectively, “financial representations”) submitted to the Commission, namely:

1. the Financial Statement of Defendant Prime Sites, Inc. signed by Ami Shafrir, President, on September 29, 2017, including the attachments; and
2. the Financial Statement of Defendant's President signed on September 30, 2017, and submitted to Commission counsel, including the attachments.

         D. The suspension of the judgment will be lifted if, upon motion by the Commission or Plaintiff, the Court finds that Defendant or Defendant's President failed to disclose any material asset, materially misstated the value of any asset, or made any other material misstatement or omission in the financial representations identified above.

         E. If the suspension of the judgment is lifted, the judgment becomes immediately due in the amount specified in Subsection A above (which the parties stipulate only for purposes of this Section represents the amount of the civil penalty for the violations alleged in the Complaint), less any payment previously made pursuant to this Section, plus interest computed from the date of entry of this Order.

         F. Defendant relinquishes dominion and all legal and equitable right, title, and interest in all assets transferred pursuant to this Order and may not seek the return of any assets.

         G. The facts alleged in the Complaint will be taken as true, without further proof, in any subsequent civil litigation by or on behalf of the Commission, including in a proceeding to enforce its rights to any payment or monetary judgment pursuant to this Order.

         H. Defendant agrees that the judgment represents a civil penalty owed to the government of the United States and is not compensation for actual pecuniary loss.

         I. Defendant acknowledges that its Employer Identification Numbers, which Defendant previously submitted to the Commission, may be used for collecting and reporting on any delinquent amount arising out of this Order, in accordance with 31 U.S.C. §7701.

         IV. PROHIBITION AGAINST MISREPRESENTATIONS

         IT IS FURTHER ORDERED that Defendant and Defendant's officers, agents, employees, and attorneys, and all other persons in active concert or participation with any of them, who receive actual notice of this Order, whether acting directly or indirectly, in connection with promoting or offering for sale of any good or service, are permanently enjoined from misrepresenting, or assisting others in misrepresenting, expressly or by implication:

A. that consumers have been specifically chosen for a role in an upcoming motion picture;
B. that consumers have been the subject of interest from casting directors;
C. any fact material to Defendant's practices with respect to personal information collected from children, including Defendant's collection, use, and disclosure practices; or
D. any other fact material to consumers concerning any good or service, such as: the total costs; any material restrictions, limitations, or conditions; or any material aspect of its nature or central characteristics.

         V. ORDER ...


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