WASHINGTON (AP) - An online game company owned by Walt Disney Co. is paying $3 million to settle federal charges that it illegally collected and disclosed personal information from hundreds of thousands of children under age 13 without their parents’ consent.
The Federal Trade Commission said the settlement with Playdom Inc. announced Thursday represents the largest civil penalty ever for a violation of the Children’s Online Privacy Protection Act.
The FTC alleges Playdom operated 20 Web sites that collected children’s ages and email addresses during registration and allowed children to post their names, email addresses, instant messenger IDs and location on personal profile pages and in online community forums. Between 2006 and 2010, about 403,000 children registered with Playdom’s general sites. An additional 821,000 users registered with its Pony Stars site for children, the FTC said.
Playdom acquired the sites when it bought developer Acclaim Games Inc. in May of 2010 and named Acclaim’s chief executive, Howard Marks, head of the Acclaim Studio at Playdom, the FTC said. The agency alleges that Playdom and Marks continued to collect and disclose personal information from children in violation of the law following the acquisition. The FTC complaint also alleges that Playdom’s privacy policy was deceptive because it said it would prohibit children under 13 from posting personal information online.
Most of the Acclaim Web sites had been shut down by the time Disney Enterprises acquired Playdom in late August 2010, although a few sites that had previously been sold off to a French company continued to permit children who had already registered to retain full access. Eventually, those remaining sites also were shut down, and all user data was transferred back to Playdom.
“This matter involved a Federal Trade Commission investigation of the practices of Acclaim Games, Inc., a company that was acquired by Playdom prior to Disney’s acquisition of Playdom last year,” Disney said in a statement. “Disney is pleased that Playdom and the FTC have now resolved this matter amicably.”
The Children’s Online Privacy Protection Act, a 1998 law that is enforced by the FTC, requires companies to obtain the consent of parents before collecting, using or disclosing information about children under the age of 13. A separate law passed in 1998, the Child Online Protection Act, which federal courts found unconstitutional, would have prohibited websites from making available to children any material that is “harmful to minors.”
Please read our comment policy before commenting.