Sony hit with $1 million penalty over underage online privacy violations

It really isn't a big enough penalty and the company admitted no guilt but Sony BMG Music Entertainment today agreed to pay $1 million as part of a settlement to resolve Federal Trade Commission charges that it knowingly violated the privacy rights of over 30,000 underage children. 

Specifically the FTC said the company violated the agency's Children's Online Privacy Protection Act (COPPA) and the FTC did say the penalty was its largest ever in a COPPA case.

To provide resources to parents and their children about children's privacy in general, and social networking sites in particular, the penalty order requires Sony Music to link to certain FTC consumer education materials for the next five years.

According to the FTC Sony BMG Music Entertainment represents hundreds of popular musicians and entertainers, including numerous artists popular with children and teenagers. The company operates over 1,000 Web sites for its musical artists and labels. Sony Music requires users to submit a broad range of personal information, together with date of birth, in order to register for these sites. On 196 of these sites, Sony Music knowingly collected personal information from at least 30,000 underage children without first obtaining their parents' consent.

Many of these sites also enable children to create personal fan pages, review artists' albums, upload photos or videos, post comments on message boards and in online forums, and engage in private messaging. In this way, children were able to interact with Sony Music fans of all ages, including adults, the FTC said.

COPPA prohibits unfair or deceptive acts or practices in connection with the collection, use, or disclosure of personally identifiable information from and about children under 13 on the Internet. The law requires operators to notify parents and obtain their consent before collecting, using, or disclosing children's personal information.

The FTC's complaint alleges that Sony Music violated COPPA by failing to provide sufficient notice on the Sony Music Web sites of what information the company collects online from children, how it uses such information, and its disclosure practices; failing to provide direct notice to parents of Sony Music's information practices; failing to obtain verifiable parental consent; and, failing to provide a reasonable means for parents to review the personal information collected from their children and to refuse to permit its further use or maintenance.

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