A new California statute, which originated as SB 568 and will be codified as § 22580 et seq. of the Cal. Bus. & Prof. Code, takes effect January 1, 2015.  The law has two key provisions: one addressing online advertising in connection with minors, which this post addresses, and one addressing a minor’s right to delete posted content, which was discussed in a recent post.   The statute applies to websites, online services, online applications and mobile applications (“Online Services”). § 22581(a). Given the time it may take Online Services to implement compliance and to work with third party vendors and partners to address compliance, now is the time to start preparing for the January 1 deadline. Here are key points to note about this new regulation, which applies to minors (those younger than the age of 18): 

1. The Statute Impacts The Advertising Of Nineteen Categories of Products and Services (“Prohibited Advertising Categories”).  Those Prohibited Advertising Categories are (per § 22580(i)):

• Alcoholic beverages;
• Firearms;
• Ammunition;
• Handgun safety certificates;
• Spray paint;
• Etching cream;
• Tobacco, rolling papers, and any other instruments for smoking or ingesting tobacco or controlled substances;
• BB guns;
• Dangerous fireworks;
• UV tanning;
• Dietary supplements containing ephedrine group alkaloids;
• Lottery tickets;
• Salvia Divinorum;
• Body branding;
• Tattoos;
• Drug paraphernalia;
• E-cigarettes;
• “Obscene matter” as defined by § 311 of the California Penal Code; and
• A “less lethal weapon” (e.g., rubber-bullet or bean-bag guns)

 2. The Statute Prohibits Online Services Directed To Minors From Serving Ads for Prohibited Advertising Categories.  If your Online Service is directed to minors, your Online Service may not market or advertise any of the Prohibited Advertising Categories.  The statute applies if an Online Service – or a portion of the Online Service -- is directed to minors, which means that it is “created for the purpose of reaching an audience that is predominately comprised of minors, and is not intended for a more general audience comprised of adults.” § 22580(e). 

3. The Statute Prohibits Online Services With Actual Knowledge Of A Minor From Targeting Ads for Prohibited Advertising Categories.  If an Online Service has actual knowledge that a user is a minor, the operator may not use information specific to that minor to direct advertising for any of the Prohibited Advertising Categories to that minor. § 22580(b)(1).  The information Online Services may not use includes a profile, records of the minor’s activity on the Online Service, and the minor’s  address and location information sufficient to establish contact  --  but it excludes IP Address and product identification numbers for operation of the Online Service.  While it is unclear how broadly California will interpret “actual knowledge,” many Online Services will clearly have actual knowledge, given the tendency to collect age information.  In addition, an Online Service may have requisite knowledge if users sign-in using third party log-in credentials and that third party platform shares birth date or age information.  Note, however, that the standard is for the Online Service to use “good faith” efforts not to target prohibited advertising to minors. §22580(b)(2).

 4. The Statute Applies To Third Party Ad Servers.  Online Services directed to minors that use third parties to serve advertisements are able to shift the burden of compliance to those third party advertising services.  So long as the Online Service notifies the third party advertising service that the Online Services is directed to minors (in the manner prescribed by the advertising service), the Online Service will be considered in compliance. § 22580(h)(1).  Once notified, though, the advertising service may not advertise any of the Prohibited Advertising Categories on that Online Service directed to minors. § 22580(h)(2).

 In addition, the operator or an Online Service directed to minors, or which has actual knowledge that a minor is using its Online Service, may not knowingly use, disclose, or compile -- or allow a third party to use, disclose, or compile -- personal information of a minor if the Online Service has “actual knowledge” that the use, disclosure, or compilation is for the purposes of marketing or advertising any of the Prohibited Advertising Categories. § 22580(c).

 5. The Statute Applies Only To The Owner Of The Online Service.  The statute only applies to an “Operator,” which is the owner of an Online Service, and specifically does not include a third party host or an entity that “processes information on the owner’s behalf.” § 22580(f)