1. Computing
Elise Moreau

Path's Big Privacy Mistake Offers a Valuable Lesson for Startups

By February 1, 2013

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Dealing with user privacy is no joke. Last year, popular mobile social networking app Path discovered that it had been unknowingly accepting signups from children under the age of 13 -- a clear violation of the Children's Online Privacy Protections Act (COPPA).

Path founder Dave Morin wrote a blog post shortly after the controversy was brought to their attention last year. He apologized, admitted that Path was at fault and said that the address data had been deleted from the company's servers. He explained that underage kids were able to create Path accounts because there were no requisite checks or balances in place.

The Federal Trade Commission (FTC) announced on Friday that a settlement had been reached with Path over charges that it had collected and stored private data from underage users. Path has agreed to pay a fine of $800,000 and will be required to have its privacy policies assessed every two years for the next 20 years.

Ouch. It pretty much goes without saying that almost every tech startup/social network/online business could learn a great deal from a big privacy flub like this. For those that don't have the funds, a mistake like Path's could put a new startup right out of business for good.

The FTC has presented a new set of mobile developer guidelines to help businesses steer clear of getting into to trouble with user privacy, and you can read more about the settlement on the Path blog or on the FTC website.

Photo Path, Inc.

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