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TikTok Agrees to $1.1 Million Deal in Kids’ Privacy Suit (2)

Dec. 6, 2019, 3:18 PMUpdated: Dec. 6, 2019, 3:58 PM

TikTok Inc. and parent company ByteDance Technology Co. have agreed to a $1.1 million settlement resolving allegations they collected children’s information without their parents’ consent, according to filings in an Illinois federal district court.

The companies compiled and disclosed personal information and viewing data, including lip-syncing videos, of children who used their Musical.ly app, and sold it to third-party advertisers, according to a proposed class complaint filed in the U.S. District Court for the Northern District of Illinois.

The settlement is believed to be the first of its kind, the plaintiffs said in their Dec. 5 unopposed motion for preliminary approval. But it is only likely a slap on the wrist for TikTok, which has been valued at tens of billions of dollars, privacy attorneys and academics said.

“For a company that mammoth, that’s a rounding error, not a punishment for breaking the law or a deterrent to keep them from doing it again,” said Lindsey Barrett, a staff attorney and teaching fellow at Georgetown Law’s Communications & Technology Clinic.

The pact with TikTok follows a $5.7 million settlement with the Federal Trade Commission in February, after an FTC complaint over alleged Children’s Online Privacy Protection Act violations.

The FTC’s settlement “did not provide relief to the millions of consumers alleged to have been harmed by Defendants’ conduct,” according to the proposed class complaint.

Kid’s Data Collection

The plaintiffs alleged violations of the Video Privacy Protection Act and various state laws, and their complaint revisited other alleged COPPA violations.

The proposed settlement would cover children in the U.S. who registered for or used the Musical.ly or TikTok software application when they were under age 13, and their parents or legal guardians. Based on the limited data available, the class may include about 6 million members, the motion said.

Individual awards, estimated to range from $10 to $15, compare well with the relief obtained in other privacy class settlements, the motion said.

Class counsel plans to apply for a fee award not to exceed 33% of the fund. The settlement also calls for incentive payments of $2,500 to the lead plaintiffs.

TikTok disputes the allegations, but earlier said it had been made aware of the allegations in the Dec. 3 complaint some time ago and had been working with the plaintiffs to reach a resolution.

App Scrutiny

TikTok is facing scrutiny from other class litigants and lawmakers who believe the app could pose a national security risk because of its ties to China.

A California college student recently brought claims against the company, saying it secretly sent her data to China for targeted advertising without consent. The plaintiff, Misty Hong, alleged TikTok gathered personal data from her videos and sent it to servers in China.

Federal lawmakers, including Sens. Josh Hawley (R-Mo.) and Marsha Blackburn (R-Tenn.), have also raised concerns about TikTok’s connections to China. Senate Minority Leader Charles Schumer (D-N.Y.) also sent a letter to U.S. Acting Director of National Intelligence Joseph Maguire, saying the app poses a national security threat.

“TikTok is firmly committed to safeguarding the data of its users, especially our younger users,” Hilary McQuaide, a company spokeswoman, said. “Although we disagree with much of what is alleged in the complaint, we have been working with the parties involved and are pleased to have come to a resolution of the issues.”

Kozonis & Klinger Ltd. and Whitfield Bryson & Mason LLP represent the plaintiffs. Wilson Sonsini Goodrich & Rosati PC represents the defendants.

The case is T.K. v. ByteDance Tech. Co., N.D. Ill., No. 1:19-cv-07915, motion 12/5/19.

(Adds information about plaintiffs' claims in fourth paragraph.)

To contact the reporters on this story: Julie Steinberg in Washington at jsteinberg@bloomberglaw.com; Daniel R. Stoller in Washington at dstoller@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Laura D. Francis at lfrancis@bloomberglaw.com; John Hughes at jhughes@bloomberglaw.com

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