Internet sites for children say new law hurting business

SAN FRANCISCO - While federal officials work out the kinks of implementing a law aimed at protecting children from online pornography, at least one major Web site for kids is saying the measure is hurting its legitimate business.

Steven Bryan, CEO of, said Wednesday the costs of complying with the 1998 Children's Online Privacy Protection Act are simply too high., the 15th most popular entertainment site for children according to Media Metrix Inc., will pull its e-mail and chat-room services Oct. 1. and try to make up for the predicted 20 percent loss in traffic with additional games.

COPPA requires commercial Web sites to obtain ''verifiable parental consent'' before any child under 13 participates in any interactive activity such as e-mails or chat rooms. It also requires parental consent before a site uses any personal information, such as a name or address, from children under 13. Consent can be verified, among other ways, through postal mail or a telephone call., which gets about 1,000 new members a day and has about 650,000 registered users, estimated that it costs the company $200,000 a year to comply with the law. The costs include processing parental consent forms and hiring a dozen employees to monitor the chat rooms for 12 hours each day.

''It was the straw that broke the camel's back,'' Bryan said of the law, which went into effect in April. ''It's expensive to run those services already and with COPPA, it got more expensive, and it can't be paid for with marginal advertising revenue.''

Proponents contend the law is important in deterring child predators from using such sites and for protecting the privacy of children in the same way they are protected in the real world.

''The alternative is for those sites to put kids at risk,'' said Lee Peeler, the Federal Trade Commission's associate director for advertising practices.

But businesses need to learn that there are exceptions and ways to get around the law before they decide to eliminate their interactive services, he said. For instance, he said, Web sites can operate children's chat rooms under the law without parental consent if they delay the release of the chat and remove first any material that is inappropriate or would somehow identify the child.

''There are a lot of sites that are making a go at it, and if you're in it for the long run, parents' trust is important, and that's what COPPA provides,'' Peeler said.

It's unclear how many other child-oriented Web sites are similarly falling victim to the high cost of compliance, but Bryan predicted that, which launched two years ago as Congress was debating the measure, will not be alone., another popular children's Web site, agreed that complying with the law has been expensive. It costs the 5-year-old company at least $100,000 a year - without counting the staff it takes to monitor the chat rooms, said the company's managing director Ali Pohn.

But the advantage for is that it was doing what COPPA required even before the law was passed, Pohn said.

''There does need to be some regulation of what's going on out there,'' she said. ''And what I hope COPPA does is make parents aware that when their kids are on the computer, they're not just sitting in the living room or the family room but that they're actually out there in the world.''


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