While online review company Yelp Inc (NYSE:YELP) may have won a small victory in California last week, the company was forced to settle a recent lawsuit over collecting data on children as young as nine.

Yelp Inc Settles Lawsuit After Collecting Data On Children

California passes Yelp bill

Last week, California Governor Jerry Brown signed a law over “disparagement clauses,” lines included in businesses’ terms of service that prohibit customers from posting negative comments about the service they received. By doing so, he essentially guaranteed that those who Yelp (c’mon, Google is a verb) will not face legal or financial penalties.

It’s also expected that this week will see Rep. Eric Swalwell,D-Calif. introduce a bill that would federally strengthen California’s law. And somewhat boringly and far too patriotically, he’s calling it The Consumer Review Freedom Act. If passed, it would allow Yelpers (c’mon, I already used it as a verb) to review without repercussions and would be enforced by the Federal Trade Commission as well as state attorneys general.

“It’s un-American that any consumer would be penalized for writing an honest review,” Swalwell said. “I’m introducing this legislation to put a stop to this egregious behavior so people can share honest reviews without fear of litigation.”

Yelp settles lawsuit

While that may be all well and good, it clearly doesn’t allow Yelp to collect information about children.

The company announced today that is has paid $450,000 to settle a suit that accused it of collecting the names and email addresses of children as young as nine without parental consent.

According to the suit filed by the Federal Trade Commission, between the years of 2009 and 2013, the San Francisco-based Yelp willfully gathered information from children who signed up for Yelp accounts and it failed to adequately test its age registration guidelines.

Yelp blamed a software problem.

“Only about 0.02 percent of users who actually completed Yelp Inc (NYSE:YELP)’s registration process during this time period provided an underage birth date, and we have good reason to believe that many of them were actually adults,” Yelp said in a blog post today.

Win one, lose one.

via: Businessweek