Disney Subsidiary Will Pay $3 Million for Violating Children’s Online Privacy

By Cameron G. Shilling (originally published 5/19/2011)

A Disney subsidiary, Playdom, Inc., has agreed to pay a $3 million penalty to settle a Federal Trade Commission (FTC) charge that it violated the FTC’s Children’s Online Privacy Protection Act (COPPA) Rule by collecting and disclosing personal information from hundreds of thousands of children under age 13 without their parents’ prior consent.

This settlement is the largest civil penalty for a violation of the COPPA Rule.  The COPPA Rule requires that website operators notify parents and obtain their consent before they collect, use, or disclose children’s personal information.  The COPPA Rule also requires that website operators post a privacy policy that is clear, understandable, and complete.

Playdom is a leading developer of online multi-player gaming virtual worlds.  At least one of them, called Pony Stars, was specifically directed to children, and others intended for a general audience also attracted significant children.  The FTC complaint alleged that Playdom collected children’s ages and email addresses during registration, and then enabled children to publicly post their full names, email addresses, instant messenger IDs, and location on personal profile pages and in online community forums.

The FTC charged that Playdom’s failure to provide proper notice or obtain parents’ prior verifiable consent before collecting or disclosing children’s personal information violated the COPPA Rule.  It further charged that Playdom violated the FTC Act because Playdom’s privacy policy misrepresented that it would prohibit children under 13 from posting personal information online.

In addition to the $3 million penalty, the consent decree permanently bars Playdom from violating the COPPA Rule and from misrepresenting their information practices regarding children.

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