Company Town

The business behind the show

« Previous Post | Company Town Home | Next Post »

Disney pays $3-million settlement for now-defunct online sites that illegally disclosed children's information

May 12, 2011 | 12:45 pm

The Walt Disney Co. has agreed to pay $3 million to settle charges that online virtual worlds once operated by its Playdom division violated federal rules designed to protect the safety and privacy of children under age 13 on the Internet.

The Federal Trade Commission charged that several sites, including one online virtual world targeting children called Pony Stars, illegally collected and disclosed personal information from thousands of children, in violation of the Children's Online Privacy Protection Rule.

Some 821,000 children registered with Pony Stars from 2006 to 2010, according to the FTC. Another 403,000 children provided their information to some of the 19 other virtual worlds operated by Playdom, including 2 Moons, 9 Dragons and My Diva Doll.

A complaint filed Wednesday in federal district court in Los Angeles maintains that these sites collected children's ages and email addresses during the registration process, and allowed kids to publicly post personal information -- including their real names, locations and email addresses -- and participate in community forums.

The FTC charged that these sites failed to get parents' consent before collecting or disclosing this information, in violation of COPPA. 

“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 Interactive Media Group spokeswoman Carrie Davis said in a statement. "Disney is pleased that Playdom and the FTC have now resolved this matter amicably.”

These sites had been created by Acclaim Games,  a company that Playdom acquired on May 18, 2010. Three months later, the Walt Disney Co. acquired the parent company, Playdom, for $563.2 million.

By the time Disney completed the purchase on Aug. 27, 2010, Playdom had shut down most of the online virtual worlds operated by Acclaim, but transferred some of the sites to operators outside the United States, the FTC maintains in its complaint.

One French company,  Feerik Ltd., took over operation of Pony Stars and My Diva Doll -- a move that allowed children who had previously registered to continue playing games and accessing their accounts. Feerik agreed to shut down both online virtual worlds in November 2010, and transferred the individual data back to Playdom.

In addition to paying a $3-million civil penalty, Disney and Playdom are barred from violating COPPA or misrepresenting their information practices regarding children.

-- Dawn C. Chmielewski