An online game company owned by Walt Disney Co. is paying $3 million to settle federal charges that it violated the Children's Online Privacy Protection Rule by illegally collecting and disclosing personal information from hundreds of thousands of children without parents' consent.
FTC alleges that Playdom, Inc. and company executive Howard Marks ran 20 virtual world websites, of which at least one was specifically aimed at children. Between 2006 and 2010, approximately 403,000 children registered on the defendants' general audience sites, and 821,000 more users registered in the Pony Stars children's site.
The defendants allegedly collected children's ages and email addresses during registration and enabled children to publicly post their personal information on profile pages and in online communities. FTC said the defendants' failure to provide proper notice or obtain parents' prior verifiable consent before collecting or disclosing children's personal information violated the COPPA Rule.
In addition to the $3 million civil penalty, the settlement order permanently ban the defendants from violating the COPPA Rule and from misrepresenting their information practices concerning children.