Playdom Settles FTC Charges It Mishandled Childrens’ Private Info

Even though no comprehensive online privacy law has yet been passed by Congress, the Federal Trade Commission has gotten busy in the last year enforcing privacy rules in a few areas in which it’s already empowered to act, like protecting children. Playdom will pay $3 million to settle FTC charges that it illegally collected information from children younger than 13, and then exposed that information online.

Playdom operated 20 “virtual worlds” websites where users could play online games, including 2 Moons, 9 Dragons, and My Diva Doll. According to the FTC, one of those sites, Pony Stars, was specifically aimed at children, and 821,000 users registered between 2006 and 2010. The other sites had more general audiences but also attracted 403,000 children who registered in the same time period.

The games that the FTC is concerned about were acquired by Playdom when it purchased Acclaim Games last year. Playdom was purchased by Disney a few months after the Acclaim acquisition.

The game sites did the same things that a lot of community-based websites do. The games featured “personal profile pages” and online community forums, and enabled-not required-users to “publicly post their full names, email addresses, instant messenger IDs, and location.” But the rules are different for kids, and under one of the few existing federal laws that deals with online privacy, the Children’s Online Privacy Protection Act or COPPA, Playdom should have provided proper notice and obtained parental consent before collecting or disclosing kids’ personal info.

The company has agreed to pay $3 million to settle the charges, and sign a consent decree that it won’t violate COPPA in the future. The complaint also personally named Playdom executive Howard Marks, who was CEO at Acclaim and continued to run the Acclaim games while at Playdom.

Disney (NYSE: DIS) didn’t immediately respond to a request for comment on the settlement.

»  Copies of the Complaint, Exhibits, and Consent Decree are available on the FTC’s website