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Disney company fined over abuse of kids' data

Disney is to shell out $3 million to settle Federal Trade Commission charges that one of its subsidiaries illegally collected and distributed data relating to children without parental permission.

Playdom, which owned and operated 20 'virtual worlds' aimed at children under 13, registered 403,000 kids on its general-interest sites and more than 800,000 on its Pony Stars site which came in for particular criticism in the FTC complaint.

The FTC's Children's Online Privacy Protection Act (COPPA) rules state that site operators should get parental permission before they collect, use or disclose children's personal information as well as as displaying a clear, understandable and complete privacy policy, rules which Playdom failed to follow.

“Let’s be clear: Whether you are a virtual world, a social network, or any other interactive site that appeals to kids, you owe it to parents and their children to provide proper notice and get proper consent,” said Jon Leibowitz, chairman of the Federal Trade Commission. “It’s the law, it’s the right thing to do, and, as today’s settlement demonstrates, violating COPPA will not come cheap.”

The FTC alleges that the company collected the ages and email addresses of kids during registration, and then allowed the same kids to publicly post their full names, email addresses, instant messenger IDs, and location, as well as other personal information, on profile pages and in online community forums.

The FTC also said that the defendants violated the COPPA Act because Playdom’s privacy policy claimed that the company would prohibit children under 13 from posting personal information online.

As well as the $3 million civil slap, the settlement permanently bars the defendants from 'misrepresenting their information practices regarding children'.

The violations took place between 2006 and 2010. In August 2010, Disney acquired Playdom for more than half a billion dollars.